Mortgage payments reduced (Halifax)

Sapindus

Halifax have annoyed me.  For the last few years while interest rates have been low I've been making overpayments on my mortgage.  I was allowed to overpay by 10% of the balance at the start of year without starting to incur ERC, and I maxed that out.  But this meant that once I'd put the 10% sum in, I was technically overpaying with my regular monthly payments, which stayed the same as had been agreed when I took out the fixed rate.  So I was overpaying even more and have got well ahead, saving money and bringing forward the date when my mortgage would be paid off.

Halifax (with plenty of warning) have decided to regularly reassess my mortgage payments and have now followed through on that threat and have reduced the monthly direct debit.  Of course they have, I was going to reduce the profit they were making out of me on my mortgage.  The only consolation is that I am now on the SVR while I'm selling my house, so I could in fact pay off as much as I want, but I'm saving instead now so as to have money upfront for renting.

But their new policy has changed the overpaying decision scenario considerably, so far as I can see!

Sapindus

Because I think they were making those threats to reassess the payment even before I came off the fixed rate.

BarelySentientAI

They're not "threats".  They're terms and conditions of the mortgage contract.

Hoenir

If the DD wasn't reassessed you'd be paying ERC's in line with your contract. You'd soon be complaining then and most likely asking for compensation. 

Sapindus

Hmm OK maybe "threats" is a bit hard, "warnings" then.  It's changes to the terms and conditions because for years I'd been overpaying and not had my payments changed and not had to pay any ERC, then they started sending letters saying they were going to start assessing payments to make sure people were paying enough.
I even used to ring up every year to make sure I was still allowed to overpay, until they created a page on the online banking that told you clearly what your remaining overpayment allowance for the year was that you could make without incurring an ERC. Not "you can make this payment but then we'll reassess your DD".
And now I'm on the SVR so there is no penalty for making overpayments, yet they have already tweaked my DD downwards because I made an overpayment, so it's not to do with helping me avoid ERC.  It's purely because if they let me save myself money in interest, that's interest they've lost.  

BarelySentientAI

Sapindus said:

Hmm OK maybe "threats" is a bit hard, "warnings" then.  It's changes to the terms and conditions because for years I'd been overpaying and not had my payments changed and not had to pay any ERC, then they started sending letters saying they were going to start assessing payments to make sure people were paying enough.
I even used to ring up every year to make sure I was still allowed to overpay, until they created a page on the online banking that told you clearly what your remaining overpayment allowance for the year was that you could make without incurring an ERC. Not "you can make this payment but then we'll reassess your DD".
And now I'm on the SVR so there is no penalty for making overpayments, yet they have already tweaked my DD downwards because I made an overpayment, so it's not to do with helping me avoid ERC.  It's purely because if they let me save myself money in interest, that's interest they've lost.  

Is it?  Have you checked the T&Cs of your deal to see how they say they can treat overpayments?

Or is it that they used to be more generous than the contract said and now they're just holding you to the terms?

You might be surprised what you actually signed.  It probably had a mortgage length for a start - which if they didn't recalculate you would now be breaching.

Many lenders do it the same way.  Some do one method for lump sum overpayments and the other for regular overpayments.  For others, the decision is made based on size of overpayment.  It should be explained in the terms of the deal - just like the 10% allowance is.

Phoenix72

How dare Halifax adjust the payments so that the mortgage ends on the contractually agreed due date, agreed by both parties.

Sapindus

Phoenix72 said:

How dare Halifax adjust the payments so that the mortgage ends on the contractually agreed due date, agreed by both parties.

I could pay off 99% of it and then spend the next 15 years paying pennies in interest, if it mattered that much to "keep to the contractually agreed date". I don't think I have to.  I'm out of my fixed rate, there is no penalty for paying it all off early.  When I sell my house, it will be paid off.  If I won the lottery, I could pay it off, in fact Halifax themselves run a  prize draw where one person each month gets their mortgage paid off. They can't force me to still have a mortgage just to keep to a contractually agreed date.
  

BarelySentientAI

Sapindus said:

Phoenix72 said:

How dare Halifax adjust the payments so that the mortgage ends on the contractually agreed due date, agreed by both parties.

I could pay off 99% of it and then spend the next 15 years paying pennies in interest, if it mattered that much to "keep to the contractually agreed date". I don't think I have to.  I'm out of my fixed rate, there is no penalty for paying it all off early.  When I sell my house, it will be paid off.  If I won the lottery, I could pay it off, in fact Halifax themselves run a  prize draw where one person each month gets their mortgage paid off. They can't force me to still have a mortgage just to keep to a contractually agreed date.
  

Correct.  But equally they shouldn't just unilaterally change your contractually agreed terms to make the mortgage shorter because of an overpayment.  They, and you, should stick to the contract.  If the T&Cs say overpayments change the term, that's what they should do.  If the T&Cs say overpayments change the monthly amount, then that's what should happen.

chanz4

I have been with them 11 years and always been the case, i repay 10% each year still saving as less balance for the daily rate interest

Phoenix72

Sapindus said:

Phoenix72 said:

How dare Halifax adjust the payments so that the mortgage ends on the contractually agreed due date, agreed by both parties.

I could pay off 99% of it and then spend the next 15 years paying pennies in interest, if it mattered that much to "keep to the contractually agreed date". I don't think I have to.  I'm out of my fixed rate, there is no penalty for paying it all off early.  When I sell my house, it will be paid off.  If I won the lottery, I could pay it off, in fact Halifax themselves run a  prize draw where one person each month gets their mortgage paid off. They can't force me to still have a mortgage just to keep to a contractually agreed date.
  

Yes, you could do that but the fact remains you took out a mortgage for x number of years that is due to end on a specific date. All they are doing is adjusting payment so that date is met. Don't think anybody mentioned forcing you to do anything.