I think our repayments are wrong

milliemonster

In March we moved house and because of some debts we needed to pay off took an interest only mortgage for 3 years with Accord, it is a tracker of 0.89% above the BoE base rate. Initally payments were set at £770 a month, fine, this was when the base rate was 5.25%

Now, we had a cut (May or so? can't remember when exactly) to 5%, but our mortgage wasn't adjusted, so still carried on paying £770 a month, I did think this was little odd but thought I would just see how things panned out.

Today I thought I would just do an online calculator to check and the repayment figure on an interest only mortgage at 5.89% comes out at £736 a month. Does anyone think this is right?

I need to phone Accord tomorrow to check this out obviously but we have never had any paperwork from them following the move so have no account number or even a telephone number to phone!

Can anyone advise?

tiredredhead

When we moved 2 years ago RBS who we are with for mortgage thought we lived at our old address. Ha ha. Even though they lent us the money for new house. All my mail was redirected for a few months so didnt realise at first. It was only when we didnt receive a yearly statement that i got suspicious.

Locoblade

Its not a bad thing to overpay a bit though is it? Assuming you can continue to afford £770 a month, and you're not incurring any penalty for overpaying, then Id be tempted to continue if I were you, as you'll be paying off some of the capital.

opinions4u

milliemonster wrote: »

In March we moved house and because of some debts we needed to pay off took an interest only mortgage for 3 years with Accord, it is a tracker of 0.89% above the BoE base rate. Initally payments were set at £770 a month, fine, this was when the base rate was 5.25%

Now, we had a cut (May or so? can't remember when exactly) to 5%, but our mortgage wasn't adjusted, so still carried on paying £770 a month, I did think this was little odd but thought I would just see how things panned out.

Today I thought I would just do an online calculator to check and the repayment figure on an interest only mortgage at 5.89% comes out at £736 a month. Does anyone think this is right?

I need to phone Accord tomorrow to check this out obviously but we have never had any paperwork from them following the move so have no account number or even a telephone number to phone!

Can anyone advise?

Are you paying by standing order or direct debit?

Is there a fee debited to the mortgage on completion?

When you do call, ask them exactly how they treat the overpayments - do they actually reduce the amount of interest you are being charged? If not, ask for the money back!

milliemonster

Well I spoke to Accord tonight and it seems we have been overpaying since we took the mortgage in March by about £90 a month, but with todays rate cut they have said the monthly payment will go down by substantially more than this.

What they told me was that they only adjust their monthly payments in January each year, unless someone phones up. To be honest, it doesn't really matter as we have obviously paid off a little of the capital now, but I hadn't realised that a tracker mortgage worked like this, I thought your repayments were altered as soon as there was any change in interest rates? I don't want the money back but it defeats the object of an interest only tracker mortgage doesn't it?

We do pay by DD and yes there was an arrangement fee which was added on completion but the monthly repayment took this into account.

Anyway, at least the matter is cleared up and my mortgage has reduced a little (which is a bit of a bonus!!!)