Paying off fixed rate mortgage at the end of the term

Murrymints

I am in a ridiculous situation with Halifax. Through a broker, I opted to change to a fixed rate mortgage 2 years ago. That rate finishes at the end of this month - 30th April. The new variable rate kicks in on the 1st May. I asked for a figure to pay off the mortgage on the 30th April and I have been told I need to pay the Early Repayment Penalty (some £6k). I argued that I had already paid the mortgage payment for April (payable on the 1st of the month) and therefore I am not paying this off early if I repay on the 30th April. They disagree???? So if I pay on the 1st May the figure will include the variable rate which will cost me an extra £1k. So either way I am trapped into this stupid situation. I feel this is so unfair. I will be "forced" to pay off the mortgage on the 1st May and pay the extra £1k!!! What if I pay off the mortgage at 6.00 pm on the 30th April? Has anyone come across this problem before?

getmore4less

One days interest at SVR will not be £1k

harshitguptaiitr

Do you have any overpayment reserve left? Can you overpay as much as you can today and then your interest liability will be reduced on 1st May?

Also I am not sure how come ERC Is 6k and a single day interest rate on SVR is 1k - can you please share what you are using in your calculation:

outstanding loan
SVR interest rate for 1st May
ERC rate

Thrugelmir

Murrymints wrote: »

So if I pay on the 1st May the figure will include the variable rate which will cost me an extra £1k.

No you won't. The interest charged on the fixed term product will be calculated to the 30th April. The new rate of interest will be applied to the daily balance outstanding up to the 31st May. Which will be repaid on the 1st June.

Over the term of the entire mortgage everything washes out to ensure repayment of the debt over the agreed term.

phillw

Murrymints wrote: »

So if I pay on the 1st May the figure will include the variable rate which will cost me an extra £1k.

Do you mean another direct debit will go out on the 1st? The settlement figure should either take that into account, or if it doesn't then they'll refund you the mortgage payment after it's been settled.

As far as I know all UK mortgages are calculated with daily interest, so the new rate shouldn't be applied until the evening of the 1st but if you pay it off on the 1st then you should have a zero balance & so there is no interest to pay at the new rate.

If they apply the new rate on interest moving from April 30th to May 1st then I'd complain and ask them to refund the interest, but it won't be £1k.