Scarborough BS and Skipton Mortgage DD rip off

Marc1978

If Skipton are writing to you on the 30th it could be after the 1st April before you get the letter.

Personally I would miss the payment on the 28th March and see what payment comes out on the 1st April. Hopefully it will be lower than your standard payment as you would have only owed Skipton the mortgage for 3 days.

They can't add the payment to the mortgage as stated - only the interest as the capital part of the payment is already part of the mortgage.

Good Luck.

Oh and if you want to read properly researched articles from a money saving expert try the main site rather than a public forum. Not that there isn't a huge amount of knowledge on the forums but it is a public forum.

MarkyMarkD

I'm glad that there are at least two other people on this thread who have a degree of intelligence and are actually listening rather than ranting.

An essential point has just come out in the last few posts.

The thing which seems to be completely beyond those who are ranting is the fact that you are only paying, every month forever and ever amen, 3 days late.

Apart from that, you are paying the same amount each month.

The fact it is in a different calendar month is academic for most purposes, but important to Skipton for FSA reporting purposes and that is why they have explained it the way they have. If you do nothing, then you are legally one month in arrears - even though it's only 3 days - and they have to report your mortgage as being one month in arrears.

By capitalising the single month of arrears - i.e. agreeing that you do not pay it - they stop having to report that you are in arrears (after six months, but that's a bit academic).

But back to the main point - your interest bearing balance will be higher than it would otherwise have been, for 3 days in each month. That's around 1/10th of a year. So at 5% interest, that will cost you around 0.5% on the monthly payment or around £5 on every £1,000 of monthly payment. That is NOT a lot of money.

All the blabbing about compound interest etc. etc. is rubbish. Each month's interest is worked out on the capital balance outstanding each day. That balance will be exactly the same as it would have been before, between the 1st and 28th of each month. And then from the 28th to the 1st, it will be one payment higher, because you are paying 3 days later. That is all that is happening.


Regarding sloughflint's point, you could "pay the three days' interest", but it would be three days' interest on the entire mortgage balance.

Based on Robert's example of £1,000 per month payments at 5% (which might be a balance of around £150k say) then 3 days' interest would be £61 or so.

Whilst it may not be one of Skipton's options, if you are free to overpay then there's no reason why you shouldn't overpay that amount, and the problem would be solved. No need to make 2 payments in one month - simply pay the £61 or whatever and you can have a one month 3 day gap between payments instead.

Rednoseranter

This three days extra interest is a red herring -its rubbish. They are effectively asking customers to pay a payment on 28th March and the 1st April - however they have recognised that it pretty unreasonable and for the March payment they have given customers three options - pay it by 28th March, pay in installments over a longer term or add it to the mortgage balance (i.e. not pay it at all). Not paying the March payment in full by the end of March will mean that customers will incur interest charges on the March payment.

They are not moving the March payment to April, they are expecting both to be paid - one way or another

Rednoseranter

Mark a quick point the FSA don't consider a mortgage to be in arrears until the total sum of the arrears is equal to two monthly payments.

Rednoseranter

The April amount will be a normal monthly payment + an amount of interest for the overdue March payment (this is where the 3 days comes from) - however the March payment isn't replaced by the April payment, assuming it is not paid, each monthly payment after that will be the normal monthly payment + a months worth of interest for the outstanding March payment.

Rednoseranter

Because of the merger they are standardising the way that they calculate and charge interest - previously they charged in arrears e.g. collected what was due for the month gone by at the end of the month, however they are moving to calculating the interest on a daily basis this means that it needs to charge in advance - hence the date has been 'dragged back' to the beginning of the month.

Letmeiniwannaaskaquestion

I'm totally confused, whatever the outcome is, Scarboro & Skipton have sent out a letter that is as clear as mud.
Whatever the extra interest payment is, it is totally unfair to impose it on customers.
I suggest anybody who is able to, finds a new mortgage provider, which is what i plan to do.

fineanddandy

Letmeiniwannaaskaquestion wrote: »

I'm totally confused, whatever the outcome is, Scarboro & Skipton have sent out a letter that is as clear as mud.
Whatever the extra interest payment is, it is totally unfair to impose it on customers.
I suggest anybody who is able to, finds a new mortgage provider, which is what i plan to do.

Well, that's the rub. I fixed it for 10 years on 2004, at a reasonable high rate interest, and with penalty charges for moving early. Now, I haven't moaned to Scarboro about paying this high rate considering the interest rate has gone the other way, as it was my decision and I am happy with it, its just my bad luck that I thought rates would go up, up,up!

So they are doing quite nicely out of me at the mo!

That is what galls me with this, it aint my fault Scarboro had to get into bed with Skipton, but I and others are having to pay for it...talk about having the cake and eating it.:mad:

MarkyMarkD

It's fine to be unhappy about how it's been explained; the financial impact isn't significant, and anyone switching mortgages purely because of this is daft as a brush.

And, fineanddandy, Scarborough are not "doing quite nicely" out of your fixed rate - they are making broadly the same money on it they have been throughout. Lenders DO NOT just "take a punt" on rates staying the same when they offer fixed rate mortgages; they hedge the risk and therefore are indifferent to rates going up or down or staying the same. If they simply "took a punt" they would go bust whenever rates rise, because of all the people paying fixed lower rates.

Just because you feel hard done by because of your relatively high fixed rate does not mean that the lender is making super-profits out of you.

fineanddandy

MarkyMarkD wrote: »

It's fine to be unhappy about how it's been explained; the financial impact isn't significant, and anyone switching mortgages purely because of this is daft as a brush.

And, fineanddandy, Scarborough are not "doing quite nicely" out of your fixed rate - they are making broadly the same money on it they have been throughout. Lenders DO NOT just "take a punt" on rates staying the same when they offer fixed rate mortgages; they hedge the risk and therefore are indifferent to rates going up or down or staying the same. If they simply "took a punt" they would go bust whenever rates rise, because of all the people paying fixed lower rates.

Just because you feel hard done by because of your relatively high fixed rate does not mean that the lender is making super-profits out of you.

I didnt say i feel hard done by by my fixed rate and I quote "it was my decision and I am happy with it, its just my bad luck that I thought rates would go up, up,up!"

And I would say your wrong also about them not benefiting from the fact that interest rates are low, whilst I am paying a higher fixed rate. From what I gather, Scarborough raised its lending mainly through it savers (according to the literature from them and I quote "Its mortgage lending is 97% funded by its retail savers ") and I don't see the savers getting very high returns from the Scarboro.

And finally, as I am awaiting an illustration for what it will cost me, I would hold on to the comment the financial impact isn't significant until then thank you Mark!

Of course, you could write me a cheque for the final amount, if you truly believe it is so small...deal:T