Online calculator says we should be paying less

michelle2008

Bump - did you get an answer??

sgt_bilko_2

No I was side tracked by work. I am assuming nobody is there over Easter so I'll call them on Tuesday.

getmore4less

sgt_bilko wrote: »

Actually Halifax do occasionally lower the amount debited, even while the interest rate remains unchanged and have done so on at least 2 occasions already. They do this to manage the time when you end the mortgage. At one point we were paying over £700 per month.

I am happy to overpay the mortgage but just want to make sure they are not charging me for something else or at a higher interest rate than advertised. I don't have all the paperwork at hand now but I'll go through it all carefully tomorrow.

Many lenders will adjust at least once a year at annual statement time if no other change has triggered a recalculation.

I have(Barclays) a never change unless it needs to go up option.

Thrugelmir

sgt_bilko wrote: »

Actually Halifax do occasionally lower the amount debited, even while the interest rate remains unchanged and have done so on at least 2 occasions already. They do this to manage the time when you end the mortgage. At one point we were paying over £700 per month.

Something has to happen to trigger a change. As changes aren't normally made on a singular basis, ie it'll effect all similar borrowers as well.

sgt_bilko_2

I have no idea. All I know is that they debit less per month now than they did a couple years ago, even though my interest rate remains unchanged. We have steadily increased the amount we overpay per month, having started at about £100 and worked our way up to £400.

They told me on the phone once that they would lower the direct debit occasionally as long as I continued to overpay. It's actually a sneaky way of trying to make sure you pay as much interest as possible by pushing you to pay for longer. If you could afford to do so, the trick would be to increase the overpayment by the same amount or more as every reduction they apply.

I would love to wave a magic wand and just pay it all off in one go. Together with the mortgage protection insurance we are typically paying out £1100 a month and it feels like a huge weight around our necks.

Goldiegirl

They only recalculate the payment when an 'event' happens, such as the end of an interest rate product, or a further advance.

It's not a sneaky way to get you to pay more interest - which actually benefits you anyway, as the more you pay, the greater the speed your mortgage debt decreases, so, over the term of the mortgage you pay less interest.

But if you are worried, all you need to do is ask them to recalculate the monthly payment, on your current debt.

MoneyEM

sgt_bilko wrote: »

Earlier today I checked a couple online calculators to see how overpayment would affect the overall interest and time before clearing the mortgage. We have £88K outstanding at 5.34% and 21 years left to go on a 30 year repayment mortgage. There is 3 years left on this current deal.

According to the calculators I should be paying £581 a month but in practice Halifax are debiting £622 a month and it made me wonder if they are charging extra for something I don't know about...

Tomorrow I planned to call them but thought I would ask here first to see if anybody knows why there might be this difference in cost. We have been overpaying fairly regularly for the last 7 years and generally manage around £400 per month on top of the standard amount.

I notice you say you are paying 5.34%, is this on your SVR? It seems awfully high for the current market. Could you not consider remortgaging?

sgt_bilko_2

Goldiegirl wrote: »

They only recalculate the payment when an 'event' happens, such as the end of an interest rate product, or a further advance.

It's not a sneaky way to get you to pay more interest - which actually benefits you anyway, as the more you pay, the greater the speed your mortgage debt decreases, so, over the term of the mortgage you pay less interest.

But if you are worried, all you need to do is ask them to recalculate the monthly payment, on your current debt.

I shall call them on Tuesday but what I was told on the phone a couple years ago and the drop in payments directly contradicts yours comments. I am on a 10 year fix with 3 years left to go.

sgt_bilko_2

MoneyEM wrote: »

I notice you say you are paying 5.34%, is this on your SVR? It seems awfully high for the current market. Could you not consider remortgaging?

No it's a ten year fix with 3 years left to go. I've looked into ending the deal but they want almost £4K to end it now, so by the time you factor that in with other costs any subsequent savings from a lower interest rate are practically zero and you are just paying up front.

I've been looking at other deals with the Halifax recently and none of them seem to make sense. At this point we owe about £87K and as the amount decreases differences in interest rate become less obvious. I gather it's tricky moving to another lender because I am self employed.

hcb42

it is nearly impossible to match these online calculators match the actual amount paid. I wouldn't worry about it