help with mortgage statement needed please...

lost_but_looking

hi,
i think this is the correct place to put this, if not can the mods please move..

i have just received my mortgage statement and i'm lost with it!
i'm on a fixed rate which i fully understand and sort of happy with, but my balance is constantly rising resulting in higher payments.
i took out an interest only mortgage and stupidly fell behind last yr, i have since re-organised all my finances and i'm catching back up.
my arrears were added to the total balance and i'm paying interest on what is only interest!! is this right?? also i have learned that there are several arrears fees added over the months at £35 each, can i reclaim these back?
so far they have added over 4.5k to my balance which why the payments are going up but surely i'm missing something??
can anybody offer any advice as to wether this is what is done?

dunstonh

my arrears were added to the total balance and i'm paying interest on what is only interest!! is this right??

Yes it is right. If you borrow money you pay interest on it. If you fail to meet the payments, you are effectively borrowing more so you pay interest in that as well.

also i have learned that there are several arrears fees added over the months at £35 each, can i reclaim these back?

There has been limited success in this area and many who have tried have come out a lot worse as they have ended up paying court fees. The packaging of these fees is as service charges and not penalty charges with most lenders and that will allow them to make such charges.

so far they have added over 4.5k to my balance which why the payments are going up but surely i'm missing something??

The only thing missing was the monthly payments you should have made.

can anybody offer any advice as to wether this is what is done?

Get the arrears and interest on the arrears caught up and you wont be paying any more. Get on repayment basis ASAP. The longer you leave it the harder it becomes to make that switch.

Robert_Sterling_3

i'm on a fixed rate which i fully understand and sort of happy with, but my balance is constantly rising resulting in higher payments.

i took out an interest only mortgage and stupidly fell behind last yr, i have since re-organised all my finances and i'm catching back up.

With an interest only payment your balance will not go down.

my arrears were added to the total balance

This makes the outstanding balance go up.
You are paying interest on the new higher balance.

is this right??
100% Correct.

also i have learned that there are several arrears fees added over the months at £35 each, can i reclaim these back?

If you have not had any arrears then claim the charges back.

so far they have added over 4.5k to my balance which why the payments are going up but surely i'm missing something??

Yes it is.
I have just answered your questions no doubt someone else will make helpful suggestions
about what you should do. about it.

Debt_Free_Chick

The arrears added to the mortgage have the same effect as taking out a new mortgage for a higher amount e.g. you originally borrowed £100k. You had arrears of £2k and added this to the mortgage. You now have a mortgage for £102k.

Now, if the original repayments were based on you owing £100k. If the repayments have not been adjusted, then you're only paying interest on £100k and not £102k - you are going to keep going backwards if you continue with this.

Robert Sterling is right - your balance does not go down with an IO mortgage. But it shouldn't go up either. On a fixed rate deal, the balance should stay the same - but only if your repayments completely match the interest calculated on the amount borrowed.

Firstly, I would ask the lender for the amount you need to pay to fully cover the interest and look to change the repayments to match that amount. You can then look back at things like charges etc and deal with them later. But the longer you leave the repayments unchanged, the worse this is going to get.

lost_but_looking

thanks for clearing that up for me , i wasn't sure, so has to ask the questions.
i have been paying extra a month for about 7 mts now so now i'm only 4mts in arrears and hope to have caught up by nov. only £2400 (it was a lot ore than that) is arrears and when i askd them what the other 2k was, i was put on hold for about 15mins and then told i'd be called back with somebody to explain but that didn't happen!! but will be chasing that up today.
as i'm on a fixed deal, i can't change it untill the current deal expires in 2yrs and then i'l be moving it onto a repayment thats for sure.
another question, if all goes well and i do catch back up and continue to pay the extra, would that over payment come off the balance at all even though i'm on interest only?