Bank changing mortgage payments while fixed?

JamesO

Just got a letter from Halifax saying they will be

'doing an extra check on your mortgage each year to make sure your monthly payment is on track. We'll do this even if you have a fixed interest rate. Please check your next annual statement to see if your payments will change'

One of the reasons they give in the letter is overpayments... but the whole reason I make overpayments is to reduce the term when I remortgage when the fix ends, so I wouldn't want to reduce my payments. 

No option is given to appeal or refuse the new payment amounts. 

Basically I think what I'm asking is if this is a new thing/special to halifax and what to ask for when I phone them (and I guess if it's worth phoning them). 

Fixed until Jan 2027. 

jrawle

This issue comes up all the time on this forum, particularly with Halifax, as well as other lenders. As the letter says, they review your monthly payment on an annual basis. You will still save money by overpaying, and when your fixed deal expires in 2027, you will be free to shorten your mortgage term, either with Halifax or a different lender.

JamesO

With respect, while I appreciate this will not be unique to me, I did search the forum before posting and couldn't find anything relevant. If there were any useful suggestions in those threads then I would appreciate a link to them. 

I have had a mortgage for a number of years (always on a fixed basis and always with overpayments) and have been with Halifax for around three years at this point - I have never received this letter before and my payments have never changed outside of a fixed term - hence creating the thread... 

My concern is that them reducing my payments will mean I save LESS interest than I would otherwise. I can only overpay a fixed percentage of my mortgage balance and do that as a lump sum each year. If my repayments are reduced then the total amount I would pay off the balance each year would be correspondingly reduced (as I'm unable to increase my overpayments accordingly). 

MWT

JamesO said:

With respect, while I appreciate this will not be unique to me, I did search the forum before posting and couldn't find anything relevant. If there were any useful suggestions in those threads then I would appreciate a link to them.

Here you are:

https://forums.moneysavingexpert.com/discussion/6497593/mortgage-company-profiteering

This is where most of the recent comments on this topic can be found...

JamesO

Thank you. I admit to seeing that thread but assuming it was a 'rant' about banking/interest rates thanks to the title. 

RelievedSheff

We had the same letter last week from Halifax. They reduced our contractual payment by £25 a month due to our overpayments.

I logged onto the online account on Monday morning and changed our overpayment from the £405 we had been overpaying each month to now be £430 overpayment per month so that we are still making the same monthly repayment.

Took the whole of 60 seconds. No faff, no drama. 

JamesO

@RelievedSheff I'm glad that worked for you - unfortunately, as I've said, I already make the maximum permitted repayments so can't do the same... 

Exodi

JamesO said:

@RelievedSheff I'm glad that worked for you - unfortunately, as I've said, I already make the maximum permitted repayments so can't do the same... 

The maximum amount is based on your overpayment allowance.

For example, if have an overpayment allowance of £30k per year (I don't know how Halifax calculate it, but most lenders do 10% of the loan amount), and your monthly payments are £1k per month, you can overpay up to £18k (meaning total payments for the year are £30k).
If your monthly payment is reduced to £800, you can overpay up to £20.4k (meaning total payments for the year are £30k).

There's no big drama here.

born_again

JamesO said:

My concern is that them reducing my payments will mean I save LESS interest than I would otherwise. I can only overpay a fixed percentage of my mortgage balance and do that as a lump sum each year. If my repayments are reduced then the total amount I would pay off the balance each year would be correspondingly reduced (as I'm unable to increase my overpayments accordingly). 

While they may (not will) reduce payment. You can still make the same payment as now which will have exactly the same effect.

400ixl

RelievedSheff said:

We had the same letter last week from Halifax. They reduced our contractual payment by £25 a month due to our overpayments.

I logged onto the online account on Monday morning and changed our overpayment from the £405 we had been overpaying each month to now be £430 overpayment per month so that we are still making the same monthly repayment.

Took the whole of 60 seconds. No faff, no drama. 

That will work whilst your overpayment is still below the % you are allowed to pay in the year. As they keep re-calculating the payments each year you will potentially hit the point where you cannot increase (and will have to decrease) the monthly payment.

A fixed term mortgage is not really suitable for continuous year on year overpayments at a set total monthly payment.

MWT

JamesO said:

@RelievedSheff I'm glad that worked for you - unfortunately, as I've said, I already make the maximum permitted repayments so can't do the same... 

If all else fails, just put the excess that you wanted to pay down, but couldn't due to the max limit, into a high interest savings account and then use the accumulated amount to pay down the mortgage once your fixed period ends.