Halifax overpayment question

Janxx

Hello, I have been enjoying the diaries on here and have a question for myself.
On my online banking I can make a lump sum overpayment. Will this reduce the term of my mortgage or do I have to phone them for this to happen?  Anyone here have a Halifax mortgage who could help? Sorry if this seems a stupid question but I am not sure.
Hope I am ok asking this on here. 

bradders1983

Normal procedure is they reduce the minimum payment required, rather than the term.  You would have to contact them to change the term, obviously this would put the minimum payment up.

IMO i would leave the term as it is after a lump sum payment. Always useful to have a buffer of being able to pay less if times get hard, and nothing stopping you continuing to pay the amount you were previously paying anyway (although if its on a DD you would have to tell them to up the DD again)

kimwp

Best to give them a call or check your mortgage terms. The one I'm with (albeit not Halifax) reduces the term automatically if the overpayment is over £500, but reduces the monthly payments if the overpayment is under £500. But you can ask them to change it and reduce the term with any value overpayment.

bradders1983 said:
...nothing stopping you continuing to pay the amount you were previously paying anyway (although if its on a DD you would have to tell them to up the DD again)

Would this not count as an overpayment or even to increase the payments you'd have to go through an affordability check and possibly pay a fee?

bradders1983

kimwp said:

Best to give them a call or check your mortgage terms. The one I'm with (albeit not Halifax) reduces the term automatically if the overpayment is over £500, but reduces the monthly payments if the overpayment is under £500. But you can ask them to change it and reduce the term with any value overpayment.

bradders1983 said:
...nothing stopping you continuing to pay the amount you were previously paying anyway (although if its on a DD you would have to tell them to up the DD again)

Would this not count as an overpayment or even to increase the payments you'd have to go through an affordability check and possibly pay a fee?

Obviously you would have to stay within whatever limit the lender has on overpayments in doing so.

They arent going to put a customer through an affordability check if they want to pay £100 more a month on a DD than needed either.  We dont know how the OP pays their mortgage, i pay mine manually every month and my mortgage provider gets more than the minimum every month if they like it or not (within the 10% a year limit)

kimwp

bradders1983 said:

Obviously you would have to stay within whatever limit the lender has on overpayments in doing so.

Yes, so "nothing stopping you" was a bit misleading. It might not be obvious to the OP or others.

bradders1983 said

They arent going to put a customer through an affordability check if they want to pay £100 more a month on a DD than needed either. 

Right- for an overpayment. When I asked my provider if I could increase my monthly minimum, I had to go through an affordability check, regardless of the increase.

As you say, we have limited information about what the OP is paying. If their overpayment reaches the overpayment limit, then allowing it to reduce the monthly minimum and making additional payments up to the original payments will incur penalties. 

bradders1983

Baffling they would put you through an affordability check for that, you could just lobbed them an extra £100pm on a standing order and surely nothing they would have been able to do about it if you were within the overpayment buffer allowed each year?

Sounds like they were wanting to put you on a reduced term to increase the payments that way.

kimwp

bradders1983 said:

Baffling they would put you through an affordability check for that, you could just lobbed them an extra £100pm on a standing order and surely nothing they would have been able to do about it if you were within the overpayment buffer allowed each year?

Not really baffling, mortgage providers have to do affordability checks for the payments that they bind you by contract to make.

I wasn't too keen on paying a penalty on that extra £100 a month...

"Sounds like they were wanting to put you on a reduced term to increase the payments that way."

Kind of...I wanted to increase my payments and reduce the term.

bradders1983

An extra £100 a month is £1200 a year. Be surprised if you incur penalties on that, unless your mortgage is tiny.

kimwp

bradders1983 said:

An extra £100 a month is £1200 a year. Be surprised if you incur penalties on that, unless your mortgage is tiny.

Or I've already overpaid by the maximum amount as I said could happen above.

KP74

Hi @Janxx I have a mortgage with Halifax.  By making overpayments your term will not change.  Mine haven't.

kimwp

KP74 said:

Hi @Janxx I have a mortgage with Halifax.  By making overpayments your term will not change.  Mine haven't.

The Halifax website says that lump sum overpayments will not cause your monthly payments to change ie the term will be reduced.

It says that regular overpayments where they take extra money will not change the term.

@Janxx best to give Halifax a call.