Mortgage Redemption

[XJ75]

One of the sub accounts on my Halifax mortgage has a fixed rate that expires on 31st Jan 2021 and then rolls onto their SVR. We want to redeem the entire amount of that sub account. I called Halifax for a redemption statement and initially they said it includes an ERC, when I questioned it they said the earliest I can repay and avoid an ERC is 1st Feb.

1st Feb is the date my monthly payment comes out and that will be based on their SVR so I'll end up paying a little bit of interest that surely could be avoided? When I mentioned this to the guy on the phone he said it will only be a small amount of extra interest, but I can't believe this can't be done in such a way that avoids both the ERC and any unnecessary additional interest.

Any ideas?

Thanks.

[Sarnie]

They are right...........you can't pay it off before the ERC expires.

[XJ75]

Thanks for the reply. Presumably that is even the case on the last date (31st Jan)?

[Sarnie]

XJ75 said:

Thanks for the reply. Presumably that is even the case on the last date (31st Jan)?

The last day is still the last day, so within the ERC period............and your direct debit for 1st Feb would have been called for by the bank circa 5 days before so the same payment would still go out on 1st Feb........

[mikey_b]

I have just done something similar - I remortgaged from one lender to another. In an effort to avoid paying unnecessary interest I set the completion date to be one day after the end of the 5 year fix. Fixed rate ended on 10th January, completion set for 11th.

Unfortunately, that meant that the redemption statement issued to the solicitor did not include the payment scheduled for the 10th, because that was a Sunday. Therefore the figure on the statement was higher than the amount I was borrowing from the new lender, so I had to stump up a few hundred quid to the solicitor to allow completion to happen.

Yesterday, I got a letter from the old lender, obviously issued automatically and dated the 11th, stating that I had been transferred to their SVR and would now be paying 3.5% interest on amount X - which was some £1250 lower than the redemption statement showed!! They are refunding, obviously, and stated that it was simply a matter of the timing being too close...

In short - don’t fuss over what is literally a few pounds. Set completion day to be a week or ten days after the end of your fixed rate, and save yourself some hassle.