Overpayments and bank reducing monthly payments

amnblog

If you are on a rate with an early repayment charge Halifax have a concessionary overpayment limit of 10% of the outstanding balance per annum.

If you owe £120,000 and overpay by £100 a month, then you remain within that limit.

Obviously, in year two when your balance is less than £120,000 your limit is now less than £100 a month. You cannot maintain an extra £100 overpayment per month in year two without incurring an earlier redemption penalty.

Given that:

1. These are the overpayment terms
2. Overpayments without penalty are a concession not a contractual right

I cannot see how the FOS can rule in your favour. Nor request any redress by Halifax.

eschaton

I don’t see the issue. 

Many providers do recalculate. I had the same 5 months ago when the rate changed. 

I had started paying £850pm after 4 large overpayments. My standard payment was £582. 

They recalculated at the rate change to £309. Instead of paying an additional £268pm, I just changed it to £541pm. 

Hoenir

eschaton said:

Many providers do recalculate. I had the same 5 months ago when the rate changed. 

That will be an automatic process in the system. As the repayment amount will need to be recalculated over the remaining period of the contractual mortgage term. 

chanz4

be less interest to pay, no issue just clogging a wasted time complaint to the ombudsman

BikingBud

Yoduderelax1 said:

A business decision has been made to implement an annual recalculation of the monthly payments on all
mortgage accounts on their anniversary. The business decision was made following the Financial Conduct
Authority (FCA) introducing a new consumer principle that requires firms to act to deliver good outcomes for
retail customers.

Forcing you to pay  more interest is not delivering a good outcome for you!

BikingBud

amnblog said:

If you are on a rate with an early repayment charge Halifax have a concessionary overpayment limit of 10% of the outstanding balance per annum.

If you owe £120,000 and overpay by £100 a month, then you remain within that limit.

Obviously, in year two when your balance is less than £120,000 your limit is now less than £100 a month. You cannot maintain an extra £100 overpayment per month in year two without incurring an earlier redemption penalty.

Given that:

1. These are the overpayment terms
2. Overpayments without penalty are a concession not a contractual right

I cannot see how the FOS can rule in your favour. Nor request any redress by Halifax.

Wrong!

£100 per month overpayment on a £120k mortgage is £1200 per year or 1%!

Lot of people supporting Halifax again here rather than considering the consumer and the outcomes that are best for them. Remember what might be correct and appropriate for one client is not correct and appropriate for all.

Not sure it's a concession if it's in the T&Cs but only one way to find out.

Interesting that despite the hard sell others seem to have received Halifax did allow the term to be shortened. 

Hoenir said:

eschaton said:

Many providers do recalculate. I had the same 5 months ago when the rate changed. 

That will be an automatic process in the system. As the repayment amount will need to be recalculated over the remaining period of the contractual mortgage term. 

For rate change yes but not necessary for overpayment.

And in the same manner there is an automatic option in my Santander mortgage that provides me with an option to continue paying the contracted and agreed amount, to reduce the mortgage term accordingly and save me significantly more interest. 

Halifax are having their cake and eating it.

Hoenir

BikingBud said:

Yoduderelax1 said:

A business decision has been made to implement an annual recalculation of the monthly payments on all
mortgage accounts on their anniversary. The business decision was made following the Financial Conduct
Authority (FCA) introducing a new consumer principle that requires firms to act to deliver good outcomes for
retail customers.

Forcing you to pay  more interest is not delivering a good outcome for you!

That's a factully incorrect statement. 

Hoenir

BikingBud said:

Halifax are having their cake and eating it.

It's basic maths less money owed less interest charged. Pointless spouting conspiracy theories. 

amnblog

BikingBud said:

Wrong!

£100 per month overpayment on a £120k mortgage is £1200 per year or 1%!

Not sure it's a concession if it's in the T&Cs

My dopey maths aside. The 10% allowance is a concession and is not in the T&C's because it is a concession.

Halifax offers now carry this text...

Sometimes you may be offered the opportunity to make lump sum or regular overpayments without having to pay an early repayment charge. Details of any current offers, which can change from time to time, can be found in the 'Information about your mortgage' booklet issued with mortgage offers.

BikingBud

Hoenir said:

BikingBud said:

Yoduderelax1 said:

A business decision has been made to implement an annual recalculation of the monthly payments on all
mortgage accounts on their anniversary. The business decision was made following the Financial Conduct
Authority (FCA) introducing a new consumer principle that requires firms to act to deliver good outcomes for
retail customers.

Forcing you to pay  more interest is not delivering a good outcome for you!

That's a factully incorrect statement. 

Please explain that factully or factually incorrect statement.

How can paying more interest be good for the customer?