Halifax mortgage overpayments - not reducing payment OR term

A_Frayed_Knot

withaspritz wrote: »

I overpay by standing order.

To be honest my understanding is the best way to do it is to shorten the term rather than reduce the monthly payments.

I didn't know you could opt for that over the phone though

Overpay by standing order or as I do (my monthly o/p varies) by internet banking. Makes no difference other than you are tied to a certain amount each month, however if you had some extra and wanted to o/p then you could just log on and o/p yourself

As for the phone scenario, I preferred to go into the branch personally (shouldn't have bothered - also a bunch of numpties) since it was my 1st large o/p


1. First of all, I couldn't o/p by card (taking the money from one account to my mortgage account, so I had to withdraw cash ££££'s from my other account (different building society) and carry it across the road to o/p my mortgage :mad:
2. I then said I wanted it to come off my account that pays interest, so my main account 01, the staff hadn't a clue what I meant :mad: made me out to be a n alien :rotfl:, and as this was my 1st time o/p, I thought I had it wrong.
3. Said I also did NOT want my monthly payment reduced, I could not stress enough I did NOT want the monthly payment reduced - what did they do - Only got me to speak to the numpties in India while I was in branch, as they could not do that for me :eek:. Heavens above. I'm sure they act stupid because it's not in their interest to carry out my instructions - they don't make it either easy to o/p, take from correct account, or reduce term and NOT monthly payment.

A_Frayed_Knot

Forgot to say -

1. Please double check your sub accounts, as if they all have interest, then why not just 1 account, I had . . . 01-main account, 98 Sub account - Interest free and sub account 99 - mortgage fee.
2. Also if you re-mortgage with halifax, then you don't need to go through the checks again, at least I didn't.

3. If you decide to take out another 5 yr fixed term - take into account when you would hit the 60% LTV as you normally get a much better deal.
4. And lastly watch out for that 10% allowance - if your o/p £600 just now then once you hit £72,000 mortgage - you will be o/p unless you reduce your term and up your monthly payments and just o/p what and when you can.

Be back in a minute or two with some scenarios :eek:

A_Frayed_Knot

ok, if and only IF you can keep up the monthly mortgage of £1040/month, then when remortgaging in April 19, then consider taking out a 6 or 7 year mortgage depending on the interest rate at the time.
Ask your mortgage adviser at Halifax (if you decide to stay with them), tell him what you can afford to pay each month and he should be able to work out how many years you need to take your mortgage out for.

Taking into account you will still be allowed to o/p 10% a year, which brings me onto another wee trick :rotfl:

If you remortgage in the April, then you will be allowed 10% of mortgage balance as at 1st Jan that year, however when you remortgage you will also be allowed another 10% from your re-mortgage balance :j A nice trick that I used to my advantage that has got me where I am at now.

A_Frayed_Knot

Another way to do it, would be to ask what the charges would be to re-mortgage early - you would need to get someone to do that, (cause that's where I get lost),

then work out how much saving you would make on your new mortgage rate (if its say half your rate just now)

= either losing or saving - only you can then decide.

ps Hope your following all this, I know what I mean, not sure if you or anybody else does :rotfl:

withaspritz

Thanks, yes I am following. The early repayment charge 1 year before it ends is 1% of the balance for me, so from April this year. Right now, it's 2% ERC applied if I go over the 10%, although I won't as I don't have the 8 grand to overpay up front lol

I think what I will do is go onto the SVR In April 2019, and continue making overpayments until I am in a favourable position regarding LTV... then fix again but maybe for 2 years. I suppose it depends what the BoE is going to do with rates in the meantime... Given the positive news about the economy (news article today that we are doing "better than expected") I can see them upping them again a few times before 2019!

Watch this space, I'll keep everyone updated! At the moment I'm in the "luxurious" position of not having many options being fixed at 4.49%.

I never mentioned my overall gambit for being mortgage free... the plan is to pay off my current first-time-buyer grade apartment, then put it up for sale with no chain - and use the cash as my deposit for a nicer place, perhaps renting since this will be sold for a few months whilst I find somewhere and the conveyancing goes through. Basically it's like I'm paying my mortgage but also my deposit on a "proper house" at the same time. I'm 32, got my mortgage when I was 22 (this was pre-financial-crisis when they were handing out mortgages like toilet paper), would like to be mortgage free on my first property by 40 - that's the dream! Mathematically, I have a decent enough stable job so should be manageable, I just want to be sure I'm optimising my methods!

Thanks for the help!!

PS - the online banking method for transferring funds is really only BACS for me as I don't have a halifax current account

A_Frayed_Knot

So 1% from April of this year to go into a better rate;

ERC - After April 18 - Cost £867 - (Mortgage then would be £ 86752.84)

then into fixed rate for 2 or 5 years at 2.04% (ish) I reckon you would save around £1000 (ish) after taking off the £800 fee for ERC for that 1st year to take you up to April 19.

So long as the £867 was the only cost for re-mortgaging early.

£1000 in their pocket or a £1000 in your pocket ??

No harm in asking.

withaspritz

Fair point! Roll on April!

Thrugelmir

withaspritz wrote: »

I can't believe without overpayment my interest was only dropping by 94 pence a month! shocking!

That's the downside of a 40 year mortgage term. Monthly outgoing might be reduced but interest you'll pay over the term is huge in comparison to a shorter term.

If you had a variable rate of interest product. Then at every change of interest rate (i.e. BOE) your monthly repayment would be recalculated. In order that the mortgage would be repaid over the remaining term.

withaspritz

OK checking in with some updates:

Overpayments are progressing well, I'm now looking at 87514 remaining staring me in the face (interest hasn't been applied yet for April - that gets applied at the end of the month.

A_Frayed_Knot wrote: »

So 1% from April of this year to go into a better rate;

ERC - After April 18 - Cost £867 - (Mortgage then would be £ 86752.84)

then into fixed rate for 2 or 5 years at 2.04% (ish) I reckon you would save around £1000 (ish) after taking off the £800 fee for ERC for that 1st year to take you up to April 19.

So long as the £867 was the only cost for re-mortgaging early.

£1000 in their pocket or a £1000 in your pocket ??

No harm in asking.

I checked my documents and the ERC is 2% after 30/04/18.

It's 5% for year 1
4% for year 2
3% for years 3 and 4
2% in final year

Scumbag Halifax ha, I assumed it would be a standard 5,4,3,2,1

I've been having a ponder and I think I am going to do the following at financially suitable points:
- Reduce term on mortgage
- Attain another fix for 5 years, accepting that there are repayment maximums for those 5 years, and sticking to them to avoid ERCs for those 5 years.

My current fixed (at 4.49%) term ends on 30 April 2019, meaning that the early repayment charge will be down to 2% at the end of this month April 2018.

I have a strong feeling that interest rates will rise over the coming 12 months. To the point where I am considering paying an ERC on my current deal (after it drops to 2%) if it fixes me for 5 years on a stellar rate.

I bank with HSBC and their mortgages seem far more competitive than Halifax at the moment... for my LTV, I would be able to fix at 2.34% on a no-fee mortgage with HSBC, for a 10 year term fixed for 5, at about £820 a month.

That's including the ERC of £1800 ish that will be applied by Halifax if I move lender before my period ends (but after 30/4/18 when it drops from 3% to 2%).

My only worry is the fees involved in remortgaging to another lender - my property is a flat and thus leasehold, and I think there's all sorts of fees in transferring the leased deed from one lender to another. HSBC will pay the basic legal fees and valuations but I have found literature online indicating their solicitors will charge for leaseholder remortgages (can't post URL as I'm a new member but happy to send via PM if anyone is curious)

What does the hive mind think? I think the fix at all time low rates for 5 years might be worth it for the ERC of £1800 amortized across the new mortgage (plus even the additional leaseholder fees from the solicitors). Especially if I continue to overpay on the new mortgage (though not to the same level as the new repayments would be nearly double my existing one - but not unmanageable).

For reference if I don't overpay, based on just my monthly commitments and my current Halifax regular amount, I have about £1700 a month of freely disposable income, so right now I am just making the most of the spare cash

withaspritz

I know it's a general faux pas to resurrect old threads, but it's my thread - thought I'd keep the history and give an update!

So - my Halifax ERCs expire tonight at midnight! Halifax's re-fixing offers were pants, so I went on Habito and their best offer came in the form of a remortgage to Natwest, who offered cashback and a much more attractive 5 year fix at 2.26%. That offer was made in December, and I'm due to complete with Natwest's conveyancers tomorrow!

So from tomorrow my rate drops from 4.49% to 2.26% and will stay at that for 5 more years!

Onward and upward - the rate was helped by Natwest's valuation which had gone up considerably since my last valuation with Halifax, putting me in the max 70% LTV bracket.