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Original poster

Mortgage overpayment loophole?

34 replies

RelativePitch · 03/10/2022 13:10

Just had a chat with HSBC to try and overpay our mortgage. We do have a 10% overpayment facility which we've never used. But she let me into a secret. Our mortgage statements run from the 22nd October to the 21st October every year. She told us we can overpay by any amount we like on the 21st October because it's considered a Zero Day. Has anybody heard of this? Can't find anything about it on the Internet. So we can throw any sum of money we like at our mortgage on the 21st October and not be penalised. It used to be a bit of a secret, but they're now actively telling people to make the most of this loophole. Did anyone else know?

OP posts:
fudgecat · 03/10/2022 13:17

Check your mortgage account on the online banking, it will clearly show what your current overpayment allowance is and the dates it runs from/toi

HP87 · 03/10/2022 13:23

Yes, my husband was told something along these lines. We fixed for 10 years and definitely can't afford more than the 10% extra so he didn't pay much attention to it. But the mortgage advisor definitely said something about it!

AbuelaGetTheUmbrellas · 03/10/2022 13:28

I’ve never heard of this - following with interest.

PinkStickleBrick · 03/10/2022 13:30

Ohnthat is interesting

Original poster
RelativePitch · 03/10/2022 13:36

The call is recorded, I have the adviser's name. And as long as it is bang on the the 21st October (because that is when our statement personally runs to), not a day before, not a day after, we can pay anything we like. She did say a warning message will pop up when we transfer over the limit, but to ignore it. It is was they call a Zero Day. I asked her if she'd get into trouble for telling me this, but the managers have cleared them to tell people this. I was astounded.

OP posts:
passport123 · 03/10/2022 13:47

RelativePitch · 03/10/2022 13:36

The call is recorded, I have the adviser's name. And as long as it is bang on the the 21st October (because that is when our statement personally runs to), not a day before, not a day after, we can pay anything we like. She did say a warning message will pop up when we transfer over the limit, but to ignore it. It is was they call a Zero Day. I asked her if she'd get into trouble for telling me this, but the managers have cleared them to tell people this. I was astounded.

I'm sure you'd make sure you get that in writing before you do it. Recorded calls can get 'lost'

Oxo01 · 03/10/2022 13:54

Yes in march we arranged to remorgage to start April at a low rate. We paid 10% lump sum in march and was told we also had a window of 2 weeks from 1st April on the new agrrement where we could pay any amount as a lump sum with no penalty. We was very surprised and was told they do not advertise it.
We can then pay still pay the usual 10% again in December.

TooMuchToDoTooLittleInclination · 03/10/2022 14:00

Oh that's interesting. I wonder if it's the same for Nationwide? If it is I would have fixed for 10, not 5 years. Bollocks.

StillNotWarm · 03/10/2022 14:08

Sounds ripe for disaster to me.
Are you looking at making more than a 20% overayment? I think I'd put in 10% this week, and 10% after the 21 October. The dates work in your favour right now.

Original poster
RelativePitch · 03/10/2022 14:13

@StillNotWarm I think we've concluded that that is what we are going to do. One lump sum this side of the 21st and the other on the other side. Tempted to ring again and have my partner record the conversation. Apparently they've been telling loads of people to do this. We still have 4 years to go on our fixed term, bit we really want to get our mortgage down.

OP posts:
luxxlisbon · 03/10/2022 14:15

How is this a secret? It’s just the way your year is calculated.
You are paying 10% right at the end of one year followed by right at he start of another. You aren’t being allowed an overpayment higher than 10% though, you then can’t make another penalty free overpayment until 22nd of October next year.
This some secret hack that means you have beat the system.

Original poster
RelativePitch · 03/10/2022 14:24

@luxxlisbon we were told ANY amount. We could have paid off our mortgage on the 21st with NO PENALTY. I kept throwing numbers at her and she kept saying yes. ANY amount. We were tempted to go in at 30%, but we're just a bit too nervous to do that.

OP posts:
luxxlisbon · 03/10/2022 14:40

RelativePitch · 03/10/2022 14:24

@luxxlisbon we were told ANY amount. We could have paid off our mortgage on the 21st with NO PENALTY. I kept throwing numbers at her and she kept saying yes. ANY amount. We were tempted to go in at 30%, but we're just a bit too nervous to do that.

I just don’t believe this is remotely true. Either the person you were speaking to is desperately in need it training or you have misunderstood.
Firstly why would they have a zero day full stop? Your mortgage is their business, I can’t imagine a bank having any way for you to pay zero fees/internet.
If there was remotely some glitch in their system why would they be telling “loads of people”. The bank is only making money off interest rates on your mortgage, it is not in their own interest for you to pay less or no interest.

sortmylifeoutoctober2022 · 03/10/2022 14:49

Please check this and get it in writing. I recall that the one-day loophole you mentioned was for us only at the end of a fixed term when we were moving onto a new deal, not every year. We, too, were with HSBC.

Circlesandtriangles · 03/10/2022 14:49

Gosh, you want to be sure the payment clears that day. My bank takes overnight to register a payment so I'd be really cautious. You don't want to incur the penalty.

sortmylifeoutoctober2022 · 03/10/2022 14:54

We were permitted to pay off 10% every year and as much as we wanted on this one-day loophole at the end of a fixed rate before we went onto another fixed rate, and then the 10% yearly would start again. It worked fine for us and the payment did clear on the same day. I did it over the phone with the mortgage department on the day.

FrownedUpon · 03/10/2022 15:02

luxxlisbon · 03/10/2022 14:15

How is this a secret? It’s just the way your year is calculated.
You are paying 10% right at the end of one year followed by right at he start of another. You aren’t being allowed an overpayment higher than 10% though, you then can’t make another penalty free overpayment until 22nd of October next year.
This some secret hack that means you have beat the system.

That’s quite a rude response and you’ve misunderstood anyway.

OP that’s helpful, thanks.

Original poster
RelativePitch · 03/10/2022 16:14

@luxxlisbon just rang HSBC and spoke to another adviser. He had never heard of a Zero Day, was horrified that I'd been told the information I'd been told.He checked with his manager and the only time you can overpay without penalty is right at the end of a fixed term. I think someone is going to get into trouble!

OP posts:
Singlebutmarried · 03/10/2022 16:19

Erm nope nope nope

To do this you’d have to go onto the SVR for one day and then start your new product a day later.

so in your case product finishes 21/10, Svr for 22/10 overpay as much as you want, new rate 23/10

or you’re going to get a hefty ERC

a lot of the call handlers at the mo haven’t got a clue and we’re triple checking criteria daily with all lenders (it’s a complete ballache as no one seems to know their arse from their elbow at the mo).

Singlebutmarried · 03/10/2022 16:21

Also double check the terms

some lenders are 10% of the original loan

others are 10% of the balance of the loan at the start of each ‘year’

Barclays also used to let you overpay 3x your monthly payment without ERC (but you’d have to check this is still the case as I’ve not asked about it recently)

Getoff · 03/10/2022 16:21

But why would the first person have said otherwise? It doesn't sound like the sort of thing that you could accidentally be wrong about. Unless maybe it applies to some mortgages and not others, and she didn't realise it didn't apply to yours.

Anyway, the question I was going to ask, is how do you ensure you make a payment on a particular precise date, given the banking system seems to take about three working days to transfer money.

Icanstillrecallourlastsummer · 03/10/2022 16:21

It might not flag from an account perspective but contractually it's rubbish. There's not way I would risk it.

Singlebutmarried · 03/10/2022 16:23

Getoff · 03/10/2022 16:21

But why would the first person have said otherwise? It doesn't sound like the sort of thing that you could accidentally be wrong about. Unless maybe it applies to some mortgages and not others, and she didn't realise it didn't apply to yours.

Anyway, the question I was going to ask, is how do you ensure you make a payment on a particular precise date, given the banking system seems to take about three working days to transfer money.

Many lender have new staff at the moment and the training is somewhat lacking in my experience

to guarantee the day of payment you call in and make the payment over the phone on your required day. Alway worth calling the payments team a week or so in advance to double check the procedure.

properdoughnut · 03/10/2022 16:25

Maybe check first before you potentially start spreading misinformation?

MrsMoastyToasty · 03/10/2022 16:30

I got told by Halifax that despite the "anniversary" of my fixed rate mortgage being in July that when they reopen after the New Year's Day bank holiday they consider that a new year for the purposes of overpayment, which seems odd to me.