Non-motoring > Paying off the mortgage early. Miscellaneous
Thread Author: Bigtee Replies: 24
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New Sat 22 May 10 13:35 
 Paying off the mortgage early. - Bigtee
I have just started to make overpayments to my mortgage not a massive amount but £100.00 a month owe £27k got 15 years left just wanted to get shut of this a little quicker.

Anyone know what the maximum i can pay off a year is?

It's a repayment mortgage with the Halifax.

Tried to do it with internet banking the bods on the end of the phone say i can't does anybody else do this?
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New Sat 22 May 10 13:46 
 Paying off the mortgage early. - Manatee
You can pay off as much as you want. What you need to know is how they charge the interest. In the old days they added the interest once a year on the balance at that time, so it made sense to reduce the balance just before (otherwise you wouldn't save any interest in the following year). I suspect most now are monthly on the outstanding balance, but best check.

The only other rider is if you have a fixed rate or other special deal which might have penalties attached. You need to look at your agreement.

As to the "how", I can't see why it would be difficult to pay by bank transfer whether from an internet service or otherwise; you need to clarify why. If they have some odd interest charging method they might need to be told it's a capital repayment to make sure your interest is adjusted - that's the only reason I can think of.
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New Sat 22 May 10 14:03 
 Paying off the mortgage early. - L'escargot
I can't imagine there's any maximum We've always paid more than the specified amount, and they were all with the Halifax. The big advantagre of a larger repayment is that it costs you less in total. Fortunately with our mortgages there was never any penalty for early redemption. We always kept the repayments a constant percentage of our income ~ as our income went up we increased the mortgage payment accordingly.
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New Sat 22 May 10 14:04 
 Paying off the mortgage early. - teabelly
It depends on the type of mortgage. Some will charge penalties if you pay more than so much. Easiest way is to increase the DD payment. You'd probably get more sensible answers from the halifax themselves on how much you can over pay and how they charge interest. If it is annual interest then you may find switching to a daily interest product beneficial.
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New Sat 22 May 10 14:18 
 Paying off the mortgage early. - L'escargot
>> Easiest way is to increase the DD payment.

I don't think you can alter the amount of direct debit payments without the agreement of the Halifax. Perhaps this is what the Halifax person meant. You can alter standing orders, but the Halifax changed from standing orders to direct debit yonks ago. tinyurl.com/4rsnz
Last edited by: L'escargot on Sat 22 May 10 at 14:20
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New Sat 22 May 10 14:26 
 Paying off the mortgage early. - Iffy
Did you sign up for some sort of deal for a fixed length of time, perhaps three or five years?

If so, you can repay as much as you like without penalty at 'rollover' - when that term comes to an end.

Seems to me you might be a candidate for one of the all-in-one accounts which treat your mortgage as an overdraft debt.

Most set a target minimum monthly repayment, to prevent your borrowing getting out of hand, but you can repay as much as you like.

This site has a 'mortgage shrinker' utility which enables you to do some calculations.

www.oneaccount.com/onev3/index.shtml
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New Sat 22 May 10 15:46 
 Paying off the mortgage early. - -
We did exactly this with the Halifax oddly enough, my IFA calculated excatly how much we could pay over and above the set mortage before incurring penalties, roughly an extra £120....there was a timescale and when that was up (checked with the branch) we upped the payments by an extra £500 a month, that knocked years off the thing.

It all depends on the original mortgage, ours was set up by our IFA and worked for us.

Getting that congratulatory letter stating they no longer have any financial interest in the property was worth all the long hours.

Very wise to reduce the mortgage as quickly as you can, if interest rates go up to anything like they were in the last downturn which they surely will then many will be in serious trouble.
Last edited by: gordonbennet on Sat 22 May 10 at 15:47
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New Sat 22 May 10 16:09 
 Paying off the mortgage early. - Bigtee
If the rates go up which they will it won't hit me quite as hard as some £50.00 extra a month it has been unlike some folks i know.

So yes im wanting to pay a little more some months more than others with the overtime etc.

Thanks for those links.
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New Sat 22 May 10 17:46 
 Paying off the mortgage early. - mikeyb
One of my mortgages is with bank of scotland, although in reality its a halifax mortgage with a different name.

I can overpay by 10% of the outstanding balance each year, although I am still in a fixed rate so it may be different outside of this. As I recall interest is calculated daily so anything over and above you can pay will make a difference

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New Sat 22 May 10 21:45 
 Paying off the mortgage early. - Zero
>> Very wise to reduce the mortgage as quickly as you can, if interest rates go
>> up to anything like they were in the last downturn which they surely will then
>> many will be in serious trouble.
>>

yup, inflation is on the rise, and the only instrument to kill it back is interest rate rises. Those falling off fixed rate deals into varaible rates will suffer mucho paino.
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New Mon 24 May 10 15:37 
 Paying off the mortgage early. - Soupytwist
I'm with the Halifax on their standard variable rate mortgage and currently paying an extra £150.00 a month. Sadly that's having a far less dramatic effect on the sum owed than your overpayments will.
We set this up by phoning Halifax's mortgage department who advised us to set up an additional monthly payment rather than changing the direct debit so that way we could change or stop the extra amount as and when required. Halifax gave us the bank details to pay it into so it got allocated to the right place.

As a general thing, is paying a bit more on the mortgage now, while interest rates are low considered a good thing? I rationalised it by thinking that while interest rates are low, any extra payments made mean that a greater proportion of it goes towards capital repayment rather than being swallowed up by interest?
Last edited by: Soupytwist on Mon 24 May 10 at 15:37
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New Mon 24 May 10 15:43 
 Paying off the mortgage early. - Stuartli
The Halifax's advice on the subject:

www.halifax.co.uk/mortgages/specialfeatures.asp
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New Mon 24 May 10 16:01 
 Paying off the mortgage early. - R.P.
The other option would be a new mortgage and get an offset one - means you can pay as much as you want. I used this and cleared my mortgage in 3 years. I still have a loan facility of 37k with them if I wanted to do something silly and buy a Jag. :-)
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New Mon 24 May 10 18:59 
 Paying off the mortgage early. - Netsur
That's silly? I can think of far sillier things to do with £37,000 in a car dealership!
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New Tue 25 May 10 07:02 
 Paying off the mortgage early. - Tigger
Over-paying on the mortgage, and clearing it eight years early was the best thing I ever did (at least money wise). Its meant that I've not been stressed about possibly losing my job - we could always live off my wife's salary for a while now there's no mortgage.

As well as making over-payments, the other way to get it down (assuming a repayment mortgage), is to shorten the term - this is the way I normally did it.
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New Tue 25 May 10 11:56 
 Paying off the mortgage early. - Bigtee
Just been in today to Halifax and you can not pay the stupid thing with online banking a security risk they say!!

Standing order or over counter only so paid my first £100.00 cash and may set up standing order for £50.00 then pay as and when im flush.

But they say i can only pay 10% off, is this extra or in total a year inc my monthly payments i should have asked?
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New Tue 25 May 10 12:08 
 Paying off the mortgage early. - Iffy
I would expect them to mean 10 per cent of the balance.

As I mentioned earlier, you could get a much more flexible arrangement with an 'all in one' account, sometimes called an 'offset' account.

It would mean changing mortgage provider, but you might find your present current account provider also offers an offset account - I'm fairly sure Barclays do, for example.





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New Tue 25 May 10 12:34 
 Paying off the mortgage early. - Bigtee
Im tied to this for another 2 years or i would move or can i still?
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New Tue 25 May 10 12:47 
 Paying off the mortgage early. - Soupytwist
We set up a standing order from our current account using Lloyds TSB's internet banking service - Halifax just gave us the relevant account numbers, sort codes, references etc. to make sure it all went to the right place. That means it's easy to amend or stop as necessary.

I must check that it's working!
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New Tue 25 May 10 13:21 
 Paying off the mortgage early. - FotheringtonTomas
>> Just been in today to Halifax and you can not pay the stupid thing with
>> online banking a security risk they say!!

You've probably been tralking to the wrong person. I've paid money into my account (non-Halifax, though, but I would be very surprised if HFX were different) from my bank's "Online Banking" system. Very odd account number, though, 99999999!


>> But they say i can only pay 10% off, is this extra or in total
>> a year inc my monthly payments i should have asked?

It's the T&Cs of your particular mortgage. Double-check with your documentation.
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New Tue 25 May 10 15:58 
 Paying off the mortgage early. - -
This was one of the reasons we employed a good old school IFA to arrange our mortage, he found the very best terms with a reasonably short period of limited overpay, then after that short period we stepped up the payments big time.

A small anecdote, i'm not the best organised chap in the world so when we went to see our IFA i took a bank statement with me as requested...he never let me live down the fact the statement was 10 years old and my late mothers...actually suggested i operated the bin filing system, damned cheek and a thoroughly good egg..;)
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New Tue 25 May 10 20:15 
 Paying off the mortgage early. - mikeyb
Bigte - Halifax are having you on regarding paying online. I opt to not have a direct debit / standing order (after they kept instructing my bank to cancel it...) and pay via HSBC on line banking. Not only have I had no problems doing it, but they are listed as one of the standard payees so I didnt even need to set up their account details. They are part of the faster payment process to so they get the money in 2 hours.

It suits me as I vary my payment date depending on how much is in the account, change my payment amount to overpay if I can, and as interest is calculated daily I can often make the payment 2 weeks early. They have no issue with this as long as I meet the contractual payment by the first of the month. I dont know how much interest it saves me (probably only a few pence) but I figure that it must add up over a few years!
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New Tue 25 May 10 20:20 
 Paying off the mortgage early. - Iffy
...Im tied to this for another 2 years or i would move or can i still?...

You can move, but it likely there will be a reducing penalty for doing so, often a percentage of the sum outstanding

Just for figures, the penalty might be £500 to move with two years to go, £250 with one year to go, and it will be nothing if you move at the end of the fixed term.
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New Wed 26 May 10 07:03 
 Paying off the mortgage early. - Bigtee
Mikeyb, Thanks i tried that last night payed only £1.00 just to see if it goes through ok will check later to see if worked but yes it is 2hrs and this will be perfect if all ok. Thanks Tony.
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New Wed 26 May 10 08:05 
 Paying off the mortgage early. - Tigger
>> But they say i can only pay 10% off, is this extra or in total a year inc my monthly payments i should have asked?

Its normally 10% of the balance which was outstanding at the beginning of the year, but I'd check - especially when you're in the final few years there can be a big difference between the balance at the beginning and end of the year.

If you're paying 10%, don't forget to also tell them whether you want the 10% to reduce the ongoing monthly payments (leaving the termination date the same), or to use the 10% to reduce the term (keeping the monthly payments the same). And check that they've done what you asked - they got it wrong most times for us.

PS. I found another way to get the mortgage paid off early if I wanted to pay more than the 10% rule was to ask them to reduce the term of the mortgage. One year I shortened it from 8 years to 6 years outstanding. It puts the monthly payments up of course.
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