Mortgage over-payment ?

Steveb63

Hi I have a Halifax 5 year fixed mortgage at 3.04%. I would like to pay off a annual 10% of my mortgage loan without incurring any early repayment changes whilst I continue to pay the agreed monthly repayments of £257.45. I understand I can do this between 01 Jan - 31 Dec.

Having done two web chats with Halifax they have given two figures, £2127.82 & £2251.24. I believe these figures do not take in to account the remaining 5 monthly payments of £257.45. I have also visited my local Halifax who said the figure is what the balance of the mortgage is at the time of my inquiry!

Does anyone know of a spreadsheet or formula to accurately work this out?

Thanks S

amnblog

Halifax say....

Currently, as a concession, in each calendar year you can make regular or lump-sum overpayments of up to 10% of the amount owed at 1st January without having to pay an early repayment charge.

If the total amount you overpay during the year exceeds 10%, we’ll only charge you an early repayment charge on the proportion you overpay above 10%.

If your loan is divided into more than one part our concession will apply to the amount owing on each part.

If you repay the loan in full within six months of making a regular or lump-sum overpayment, we’ll require you to pay the full early repayment charge, including the portion we previously did not charge you.

Remember, we can change or withdraw our 10% early repayment charge concession, so if you decide you want to make regular or lump-sum overpayments, it’s always a good idea to contact us and check if the policy has changed. We’ll give at least three months’ notice before withdrawing or reducing
the concession.
If you are moving home and can take the product with the early repayment charge with you to a new mortgage, you won’t have to pay the early repayment charge.

Steveb63

Thank you for the information amnblog. Are you able to indicate the lump-sum over-payment on £21278.27 whilst continuing with the agreed five monthly repayments of £257.45? Thank you

amnblog

'in each calendar year you can make regular or lump-sum overpayments of up to 10% of the amount owed at 1st January without having to pay an early repayment charge.'

This refers to overpayments, not your set contractual monthly payments.

[Deleted User]

10% of what you owed on 1st January.

If you took it out after 1st Jan this year, presumably 10% of what you borrowed. (I presume the product fee is included in that figure, if you added any product fee to the loan?)

If they've given you different figures, I'd request again and make it clear you will immediately pay the amount they come back with.

Hopefully, you'll be given the higher figure again (at the start of the year, presumably you owed approx £22.5k?). Do your own checks (online banking?) and you should both arrive at the same figure - with the added benefit that if anything goes wrong and they've clearly told you the figure that you subsequently repay, it's clearly grounds for complaint and waiving of any fee.

Had you determined your own figure, then they'd not consider any complaint.

In any event, the ERC is only charged on what you pay above the 10%. So if you overpay by £123 too much (difference between those 2 figures), your ERC charged will be less than a tenner so won't make a material difference either way (although I appreciate they should give you a consistent figure... 3rd time lucky!).

Steveb63

Hi Somerset La La La & amnblog thank you for your reply's. The new mortgage deal commenced August 2018.

17 January 2019 my balance was £22,489.46 so 10% would be £2,248.94
17 July 2019 mu balance was £21,278.27 so 10% would be £2,217.82

Would I be correct to say I can now pay a lump sum of £2,248.94 that was 10% of my balance in January 2019? Apologies for the constant questions.

Thrugelmir

Balance owed at the 1st January.

amnblog

I have not seen the paperwork so can not give you a categoric answer but it seems to me from the figures above you might pay a £1.55 early repayment charge for paying £2,248 this month if the maximum overpayment is £2,217.

If you pay £2,217 within a £2,248 limit, you will be paying 94p a year interest on the extra £31 you could have paid off.

Unless I am missing something, that is the extent of the risk here.