I'm replacing my atmospheric venting natural gas water heater and I'd like to clean up the type B venting solution while I'm at it. I've had a high efficiency furnace put in so now only my gas water heater is venting through what I've found to be a flexible flue liner going into my brick chimney. The existing solution is the flexible flue liner is mortared inside of a clay thimble, with a sleeve protecting the liner in the mortared portion. The mortar is badly cracked and I pulled out pieces out by hand.
What would be the right solution to have a tidy connection to the flexible flue liner? Should I remove the wye, connect the water heater vent to the appropriate increaser and mortar the flue liner with refractory cement? Is there a better product to reduce the clay thimble to the size of the flue liner?