Overpayments Confusion

coco2972

I keep reading about the difference between your overpayments shortening the term, or reducing monthly payments. I have just taken out a 38 year(!!!) mortgage with Halifax, with a 2 year fixed rate of 5.99%. We certainly don't intend to see out the life of this mortgage as we will be movin again in 2-4 years time but are keen to overpay in order to reduce the amount we owe in 2 years time, and therefore increase the amount of equity we get out of the house.
So my questions are:
1. Does this work? Or have I missed some basic point??
2. If this is my aim, does it matter how they treat the overpayments or will the result in 2 years be the same?
3. Can anyone work out what the Halifax mean by 10% overpayments in any one rolling year? Tried to get the lady in branch to explain and then on the phone and got two completely different answers, neither which made any sense! I guess I shou;dn't worry too much as I am looking to pay around £300 p/m extra on a mortgage of £150,000 so its nowhere near that % but it annoys me that they cannot give me an answer

Kaz2904

What you need to do (AFAIR) is to make your first overpayment ASAP. This starts your rolling year. This makes the difference because your mortgage is higher at the beginning of the year so you want your payment allowance to be higher. This is more likely to make a difference a few years down the line.
To answer your other questions,
1: Yes it works just like that
2:Doesn't really matter provided you don't reduce your monthly payment. A standing order is easier for you to control than the bank.

I wish I had used a standing order when first set up my mortgage. I would have saved a fortune with the interest rate reducing as much as it did then!

Kaz2904

Sorry about the smilie but if anyone knows how I got that ther, I am intrigued. I thought I pressed shift + d for D. I don't know what I must have hit!!!

djbd1973

Kaz2904 wrote: »

Sorry about the smilie but if anyone knows how I got that ther, I am intrigued. I thought I pressed shift + d for D. I don't know what I must have hit!!!

Hi Kaz,

I think (but not certain) that if you click on the [More] button under the usual smiley faces, you get additional options and there is a green smiley that has 'colon' 'D' next to so perhaps because you had this in your numbered list, the browser thought this was programming code and displayed the default character for 'colon+D'. I'll try it now -



Might be wrong but hey ho.

Your explanation of overpayments was very good too. Thanks

djbd1973

Yep

Colon followed by a capital D does work!!!

Zazen999

Hi.
They should be able to tell you the difference in the mortgage if you pay:
your mortgage minimum payments
the overpayments that you want to pay
the maximum overpayment each month.

If you ask then for a 5 year plan then you know worst case sceanrios - book a mortgage review at the Halifax rather than ask someone over the phone or in branch - you need an expert [and i am certainly not one!]

It really does work like that; we are doing the same but you can't go over the max amount or you get early repayment charges...

coco2972

Thanks for the reply's. I think most of the stuff I have read on the boards was to do with paying mortgages off and being morgage free, rather than the situation we are in where we will be buying again (probably a much more expensive and bigger house) and just wanted to be sure that in our position it was still worthwhile!