Halifax - Unwanted mortgage recalculation (reducing monthly payments)

monkey_moore

Hi all,
For the past few years I have always paid off the 10% overpayment my mortgage allows without any change to my monthly payment. This is what I want as ultimately I am trying to reduce the balance as much as possible before my current deal expires in 2026 so I can remortgage on a shorter term.
I received a letter in June saying payments *may* be recalculated in August. I rang up and said I didn't want my monthly payment to change - the person I spoke to said it was unlikely they would.
Today I have received a letter saying my monthly payments are reducing by nearly 190GBP. I rang and stated again that I don't want this and they are actively trying to keep me in debt. They have logged a complaint but advised it is unlikely that my payments will revert back to what they've been since I opened the mortgage.
Is there anything I can do to prevent them from reducing my monthly payments? Remortgaging is not a financially viable option.
Thanks!

CSI_Yorkshire

It's completely normal that your required monthly payment is recalculated if you overpay.  Several lenders operate their calculations this way, sometimes for all overpayments and sometimes for overpayments of a certain size.

Continue to pay the 10% overpayments.  You will still re-mortgage on the shorter term when you plan to.

dunstonh

Normally, when you make overpayments, you can have the monthly payments recalculated or leave them as they are (which will reduce the term instead).     Its normally a choice you make when you set up the overpayments.

kingstreet

If the contractual payment reduces, increase the overpayment by the same amount. Net result is the same.

monkey_moore

kingstreet said:

If the contractual payment reduces, increase the overpayment by the same amount. Net result is the same.

We can only overpay by 10% without penalty and have been planning to do this every year until the fixed rate ends. From the discussion I've had they'll be recalculating every August so we pay our 10% every December and then payments will reduce every September. In the next 12 months we'll be forced to pay ~£2400 less, the following year it could be another ~£3000 less. By 2026 I estimate we'll have been forced to pay around £10000 less than we'd planned to. 

If we can't go back to our original payment amount the plan is to put the monthly difference into a savings account and hopefully be able to pay this off as part of the remortgage in 2026.

monkey_moore

dunstonh said:

Normally, when you make overpayments, you can have the monthly payments recalculated or leave them as they are (which will reduce the term instead).     Its normally a choice you make when you set up the overpayments.

Historically they have not recalculated the monthly payment or officially reduced the term (presumably as they know it will be remortgaged at the end of the fixed rate) and we have not been given the option now to choose

Jem2910

Hi
i have had the same issue of the bank reducing my payments because I have overpaid 
it was only when I worked it out I will owe more when my deal ends in two years if I reduce the payments 
they never told me that 
very miss leading
have logged a complaint but basically they have said tough that’s what they are doing
but I signed a 5 year deal with fixed payments for 5 years 
surely that can’t just change when they want 

rjmachin

Jem2910 said:

Hi
i have had the same issue of the bank reducing my payments because I have overpaid 
it was only when I worked it out I will owe more when my deal ends in two years if I reduce the payments 
they never told me that 
very miss leading
have logged a complaint but basically they have said tough that’s what they are doing
but I signed a 5 year deal with fixed payments for 5 years 
surely that can’t just change when they want 

I switched to a new 5 year deal with Halifax earlier this year (May) that takes effect from 1st November.

Unfortunately, in the "Mortgage Illustration", section "5. Amount of each instalment", it clearly says:
"Your payment amount may change each year to keep your mortgage on track - even if any part
of your account is on a fixed interest rate."

Jem2910

Doesnt make sense 
my mortgage is on track and if if don’t make the extra overpayments I will owe more 
thats what I think the bank is hoping for 
very sneaky 
they don’t tell you this thou do they 

PixelPound

In T&C of every mortgage it states how they treat overpayment - reduce the instalment or reduce the term. Sometimes they'll deal with small monthly amounts one way but larger amounts might have a choice. You need to check. It might be better to save up overpayment and pay the 10% each year in a lump when you can specify that you want to reduce the term. 

PixelPound

Jem2910 said:

Hi
i have had the same issue of the bank reducing my payments because I have overpaid 
it was only when I worked it out I will owe more when my deal ends in two years if I reduce the payments 
they never told me that 
very miss leading
have logged a complaint but basically they have said tough that’s what they are doing
but I signed a 5 year deal with fixed payments for 5 years 
surely that can’t just change when they want 

They aren't, you are trying to. The fix is £x per month for 5 years eg. 60x, but the mortgage agreement is to clear the sum owed in the time agreed. You are overpaying so their system is preserving the agreement

You haven't agreed a 5 year mortgage, but a longer mortgage where the rate is fixed for 5 years.