Halifax mortgage overpayment loophole!

weezl74

Hi, I'm new today so big apologies if this has been done before...

My 5 yr fixed deal with halifax allows 10% capital overpayment each rolling year. We would be charged 4% on any amount above that- making savings a better option. Until I noticed that for a £10 admin charge I can change the term of my mortgage. i.e take it down from 19 yrs to 4 yrs for one month only, and making, in effect a big overpayment, but only paying £20 total admin fees. (just goes onto the life of the mortgage, and you recoup it very quickly with the interest savings you make by doing the overpayment, in my case the £20 fee was swallowed up within the first week of savings!).

Or you could just do what I'm now going to do, and take the term of my mortgage down so I'm paying off £200 per month more than I was. But no 4% overpay fee.

Hope that helps someone out!

Don't do it if you still have your 'fee free 10%' remaining for a particular year- pay that as a lump sum first before you do this...

L :rolleyes:

Kaz2904

Very risky buisness taking it down from 19 years to 4 years and then whacking it back up because they can always say no to the new term when you are trying to make it longer.
You could end up in all sorts of trouble.

weezl74

Hi Kaz,

Thanks for your response.
Can they do that? Would the FSA not come down heavy?! Also is it not in their best interest (scuse the pun), for me to change again to the longer term, since I'll be giving them 40k more over the longer term?

Does anyone know of someone being refused a change of term like this?

L

weezl74

Sorry to reply to my own post, but I have an update which may help someone in similar circs. to me. Just spoke to the Halifax, who are happy to put this in writing for me, and they've said that two term changes like this would not be refused, unless the second change (back to a longer term) took the borrower past retirement age. Since I'm only going to change it back to where I was, this still works for me.

L