Halifax overpayments

chelseablue

I did just ring Halifax and ask but the lady in the call centre seemed a bit bemused as to what I was talking about!


We are in a 2 year fix rate with Halifax.


We can overpay by 10% of the outstanding balance per year.


If we do make an overpayment, does that mean that our standard monthly payment reduces in the following months or do they still take the same amount each month?

scoops82

You can keep your regular payments to Halifax and send additional payments. These just come off the outstanding balance.


I would ring Halifax to just make sure you are sending them to the correct account and sort code though!

sgt_bilko_2

I've been overpaying the mortgage with Halifax on a fairly regular basis for the last 7 years now and they basically made it impossible at the time to send money from my main current account, so we ended up having to send the money through my wife's account with Barclays. It may be easier now but I had the clear impression they were making it deliberately difficult to overpay.

In practice they will keep taking the normal monthly amount and then credit the overpayment against what you owe, but over time they will gradually lower the standard sum, so that you carry on paying for longer and finish at the end of the agreed period e.g 20 years.

Given that the whole point of overpaying is to pay less interest and pay off the mortgage more quickly you need to keep an eye on the account and increase the overpayments accordingly if you want the term of the mortgage to decrease.

chelseablue

Thank you both.


I did a test overpayment using the sort code and account they give in the 'sending overpayments' section on their website and it went through fine, so that's good.


Only did £1 first in case it disappeared


My main aim of overpaying is that when the fix is up in 2 years and we re-mortgage hopefully the payments will be the same or reduce. Especially if the interest rates go up.


I know with Nationwide if you make an overpayment of at least £500 they reduce your monthly payment from the following month, was hoping Halifax might do similar but it appears not

sgt_bilko_2

I think Halifax just makes the adjustment periodically rather than immediately, but they should send you a letter advising you in advance. Basically they all want you to finish paying the mortgage at the agreed time and not before because it costs them lost interest when you pay it off early.

I actually intend to call Halifax this morning since I checked an online calculator that suggested I ought to be paying £581 a month at the current interest rate with 21 years remaining but they are actually debiting £622. Either they have not yet made the adjustment or they are charging me for something I don't know about, which has happened in the past...

On two occasions previously Halifax have had to re-imburse me for overcharging, so I tend to view them with a bit of scepticism. I doubt other banks are any better though.