Beware When Making Halifax Overpayments if your mortgage is around £250k

gboom123

If you are applying for a mortgage, it's dangerous to assume that a lower LTV amount will result in lower costs each month on your mortgage. For example, a loan of £242k can actually be more expensive than a mortgage at £252k on a house worth around £323,250 when applying via the Halifax.

For example:
5 Year Fixed for £242 over 30 years = 2.89% interest which is £1003.64 per month LTV = 74.9%
5 Year Fixed for £252k over 30 years @ 2.44% interest which is £985.92 per month LTV = 77.96%

A friend just got caught out with this so I thought it would be worth sharing as he has been working his backside off to get his LTV down but it has come back to bite him..

amnblog

A new Halifax borrower will get a better rate under 75% than over. Your suggestion that you are disadvantaged when applying is incorrect.

It sounds like your friend has simply been caught up in the vagaries of Halifax product transfer options for existing mortgage borrowers.
Halifax have one set of rates for borrowing over £249,999. Another set for borrowing between £100,000 and £249,999. A third set for borrowing up to £99,999.

Your friend has a more expensive range of options having drifted under £250,000 lending.

Incidentally, he can also access a 2.14% 5 year fixed rate on his current lending. Which is better than the 2.30% rate he would have been offered had he not overpaid.