Halifax Mortgage Overpayment

TrickyDicky101

TrickyDicky101 wrote: »

You seem to be confused - there is no economic difference between overpaying (and then reducing the term) or overpaying and then making up the reduced monthly payment to the same level it would have been before over payment.
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The bit in bold means, in effect, you are reducing the term. When I said the same economic effect I meant 'there is no difference' - same money flowing from you to the bank for the same period of time (which in essence will mean a shorter total duration of the mortgage).

Thrugelmir

waterman3 wrote: »

by reducing the term, you are paying significantly less interest over the course of the mortgage.

If you continue to overpay every month then by default the mortgage will be repaid quicker. Lenders only normally recalculate the standard monthly repayment at a change in interest rate.

Mortgage_Mark_2

waterman3 wrote: »

I wanted to make an overpayment to reduce the term rather than reduce the monthly repayments.

That isn't how Halifax mortgages are automatically set up, hence the need to recalculate affordability etc.

Goldiegirl

Mortgage_Mark wrote: »

That isn't how Halifax mortgages are automatically set up, hence the need to recalculate affordability etc.

But only if someone wants to formallyreduce the contractual term of the mortgage.

If they just pay ad hoc overpayments, they wouldn't need an interview

Mortgage_Mark_2

Goldiegirl wrote: »

But only if someone wants to formallyreduce the contractual term of the mortgage.

If they just pay ad hoc overpayments, they wouldn't need an interview

Exactly.

Hence the need for re-assessment if they did want to reduce the term.