Not taken off Interest Only at correct time.

theTinker · 25-01-2012 01:41PM #1

Hello everyone.

I could really use some advice on a problem with my mortgage.

18-20 months ago, I signed a 6 month contract for Interest Only Payments.
Today I recieved a letter showing my outstanding balance and it is the same as it was a year ago. I rang up and was told that ive only been making interest only payments for all this time.
They are investigating it further before calling me back.

What recourse do i have with this?

I do not want to be charged the extra interest on my principle as its not being reducing for the last 1+ year.
Is it a fair solution that they change the principle to reflect what it should be, and I pay the difference that i should of been charged?

Can they force me to start paying principle now and get away with the extra years interest?

Thanks

whippet · 25-01-2012 01:49PM

theTinker wrote: »

Hello everyone.

I could really use some advice on a problem with my mortgage.

18-20 months ago, I signed a 6 month contract for Interest Only Payments.
Today I recieved a letter showing my outstanding balance and it is the same as it was a year ago. I rang up and was told that ive only been making interest only payments for all this time.
They are investigating it further before calling me back.

What recourse do i have with this?

I do not want to be charged the extra interest on my principle as its not being reducing for the last 1+ year.
Is it a fair solution that they change the principle to reflect what it should be, and I pay the difference that i should of been charged?

Can they force me to start paying principle now and get away with the extra years interest?

Thanks

did you notice that your repayments were the same?

Melendez · 25-01-2012 01:56PM

This post has been deleted.

theTinker · 25-01-2012 01:57PM

whippet wrote: »

did you notice that your repayments were the same?

I didnt check the payments were any different than the previous. Just that the payments were coming out from the account.

The first time I noticed it was today when i compared my oustanding balance to my previous one as i expected it to be lower.

theTinker · 25-01-2012 01:58PM

Melendez wrote: »

This post has been deleted.

That's what I would like to do, I want my principle to be where it should be. But I dont want to be charged extra interest because they didnt switch my account back proper.

Melendez · 25-01-2012 02:07PM

This post has been deleted.

seamus · 25-01-2012 02:09PM

The thing is, if your repayment didn't change, then your principle is still where it "should be".

That is, when you're making normal repayments, you're repaying the interest + part of the principle.

When you switch to interest only, you just pay back the interest without reducing your principle (effectively "pausing" your mortgage).

So if your repayments haven't gone up after the interest only period, then you've still only been paying back enough to cover the interest, and there's no reason why your principle would reduce.

You could ask them to offest a certain % of the last 12 months' payments against the principle, but then you would be behind on your interest repayments and would have to catch back up with them.

Although it's a pain that they haven't been applying it correctly, you're not actually out of pocket. Not yet anyway, though it does mean that you've paid a years' more interest than you need to.

A reasonable compromise would be an "interest freeze", where they freeze the interest for a year (or however long you were incorrectly on the wrong repayment), and you only repay on the principle. At the end of that period then, you are where you "should be", and you can resume paying the full repayment.

theTinker · 25-01-2012 02:16PM

Melendez wrote: »

This post has been deleted.

My mortgage is very low comparing to most, My electricity bill often outweighs it. So I never really looked into it. Theres just always been plenty of savings in the account to take care of things.

I can definitely offer them the money up front in a lump sum. Its just sitting there. Hopefully they will like that option. Thanks for the input.

theTinker · 25-01-2012 02:19PM

When i say should be, i mean should be as in if the mistake never happeed. Like my balance is the same now as it was last years. Where as it should be lower and i should of been charged princple + interest.

I might be a bit confused by what you mean that im not out of pocket but also that I've payed a years extra interest that i shouldnt of.

thanks for your solution suggestion, I didnt think of that. I will offer both to them when they ring me back and hopefully they will take one of them.

Thanks for the input.

seamus wrote: »

The thing is, if your repayment didn't change, then your principle is still where it "should be".

That is, when you're making normal repayments, you're repaying the interest + part of the principle.

When you switch to interest only, you just pay back the interest without reducing your principle (effectively "pausing" your mortgage).

So if your repayments haven't gone up after the interest only period, then you've still only been paying back enough to cover the interest, and there's no reason why your principle would reduce.

You could ask them to offest a certain % of the last 12 months' payments against the principle, but then you would be behind on your interest repayments and would have to catch back up with them.

Although it's a pain that they haven't been applying it correctly, you're not actually out of pocket. Not yet anyway, though it does mean that you've paid a years' more interest than you need to.

A reasonable compromise would be an "interest freeze", where they freeze the interest for a year (or however long you were incorrectly on the wrong repayment), and you only repay on the principle. At the end of that period then, you are where you "should be", and you can resume paying the full repayment.

dudara · 25-01-2012 02:21PM

Moved to Banking & Insurance & Pensions

dudara

rameire · 26-01-2012 01:32PM

may i suggest that you contact the bank with the following.

have them calculate what the actual capital and interest repayment should have been when the account was supposed to roll off the interest only option.
then ask them to calculate what the interest amount would have been for the period if you were paying the capital and interest.
and ask them what the current balance should be now if you were paying capital and interest.

ask them to credit the interest to the mortgage that in theory was overcharged on your mortgage and that you will reduce the balance by the amout required to get the balance to what it should be if payments were being made as capital and interest.
hope it makes sence.

theTinker · 26-01-2012 10:03PM

makes perfect sense. Thanks for the suggestion.
Im writing a letter to them tomorrow as the phone call has not recieved any response back from thier 'investigation team'.
I'd rather it in writing anyways.

rameire wrote: »

may i suggest that you contact the bank with the following.

have them calculate what the actual capital and interest repayment should have been when the account was supposed to roll off the interest only option.
then ask them to calculate what the interest amount would have been for the period if you were paying the capital and interest.
and ask them what the current balance should be now if you were paying capital and interest.

ask them to credit the interest to the mortgage that in theory was overcharged on your mortgage and that you will reduce the balance by the amout required to get the balance to what it should be if payments were being made as capital and interest.
hope it makes sence.

Not taken off Interest Only at correct time.

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