Mortgage Company Profiteering

Peteshoard

When we moved house in 2020, I got a really amazing interest rate and decided to pay as much as possible over the shortest term possible. We got a 5 year fixed on 1.43%, so I was paying around £1900/month to keep the term low (14 years). Where I have been able, I've also been making my allowed 10% overpayments.

In November the Halifax wrote to me telling me that my monthly payment would decrease to around £1500. I rang up and asked them to change it back, but they refused. They state that because of new government rules on affordability they are allowed to do an annual review on mortgages and adjust monthly payments.

Now, I've never missed a payment, and I'm lucky enough to be able to afford the mortgage as it is, so to me, this change was just something that would mean a higher balance and more interest.

I complained, semi-successfully and got them to reinstate the original payment - they wont go back over the last 2 months of lower payments and correct those and they say the same correction will happen again at the anniversary of the mortgage in November 24, but this time, due to a business decision they wont change the payments back.

To me this seems like profiteering, basically I'm keeping within the terms of my mortgage, making the maximum allowed overpayments and because of them loosing out on interest they are restricting how much I can pay, this interferes with my life plans/goals to pay off my mortgage early and the really good interest rate stops me from being able to move the mortgage.

I'm taking it to the FCA - but wondered if anyone else had suffered at the hands of 'affordability calculations'?

la531983

You need to be asking them to reduce the term of the mortgage, have you actually used those words at any point?  That will put your minimum payment back up to where it was before (within a few quid, anyway, use a mortgage calculator to work it out)

sammyjammy

But that would take away the flexibility of the extra payment, this isn't something I have heard of and I think they may have misinterpreted the rules around affordability as it sounds nonsense, keep us updated please

la531983

sammyjammy said:

But that would take away the flexibility of the extra payment

The OP seems happy to go back to his old minimum payment and then top that up still, so asking to reduce the term will have the effect he desires.

Hoenir

Peteshoard said:

I'm taking it to the FCA - but wondered if anyone else had suffered at the hands of 'affordability calculations'?

Totally pointless. Your mortgage is for a contractual term. Hence the adjustment to the monthly direct debit that the lender will take. Continue to overpay. Job done. 

Tucosalamanca

If rate is 1.43% why make any additional payments until 2025?

Instant access accounts are still paying over 5%, regular saver accounts up to 8%

This is low hanging fruit if aiming to be debt free. It seems to me that OP's time would be better spent elsewhere...

dunstonh

I'm taking it to the FCA

The FCA does not take on consumer complaints.   They will just forward it to the complaints team at Halifax.

kingstreet

Dealt with here;-

https://forums.moneysavingexpert.com/discussion/6496310/halifax-not-reducing-term-with-overpayment#latest

penners324

Just adjust you regular overpayment.

There's no complaint to be made

MWT

As a complaint this makes no sense at all.

If there are excess funds available over and above the reduced monthly payments use them to make sure the maximum 10% over payments are made annually, and if there are funds left over and above that amount then put them into an interest bearing account which will be earning well above the current mortgage rate.

Then when the 5 year fix ends, use the saved proceeds to pay off a lump sum on the mortgage without the 10% limit in place as the fix has ended.

Then either pick a new fixed product, or remortgage to change the remaining term...

Peteshoard

la531983 said:

You need to be asking them to reduce the term of the mortgage, have you actually used those words at any point?  That will put your minimum payment back up to where it was before (within a few quid, anyway, use a mortgage calculator to work it out)

Yes, talked about reducing the term, but told I would have to go through a 2 hour affordability assessment to get my payments back to where they were. Will have to do that in November I think