Mortgage Co. made a mistake with our overpayment fund - Advice

jemw

Hi Everyone

We bought our first home in Jan 08 and have recently been in discussions with our Mortgage provider (co-op) about having an overpayment fund.

I recently paid 2.5k into the overpayment fund and they told me that we were able to pay another 8k in there.

Last week, I called and paid another 3k into the overpayment fund and again, they told me I could pay another 5 k in there.

I have taken 5k out of an investment fund to offset against the mortgage (as we are saving 5.95% on the mortgage rather than less with the investment). I am currently waiting for the cheque to cash (in the co-op current account) to then be able to pay it into the overpayment fund.

Just received a call from co-op who said that we can't pay the 3k into our overpayment fund, as we are only allowed 5% and not 10%:eek:. when i explained that I have been told on two occasions that it is 10%, they agreed to waiver the fee for paying the 2.5k.

However, i then questioned the further 5k that i have paid into my current account to off set once this has cleared. They said they have checked my paperwork and it does state 5%.

Being honest, I never checked the paperwork (as we never thought we'd be in a position to overpay). But, given that two of their employees have told me that it is 10%, can they really go back on their word?

They said they'd call me back tomorrow but I'm not hopeful of the outcome. If i've worked it out correctly, their mistake will have cost us approx £300 in interest savings?

Where do I stand?
Jen

dunstonh

given that two of their employees have told me that it is 10%, can they really go back on their word?

yes. Errors happen and staff sometimes say the wrong thing. If they are not willing to allow 10% to go in then no-one can force them.

At the moment, you are really in goodwill gesture territory if you were looking at complaint. Nothing really more than that. I dont see how you calculated £300 in lost interest?

jemw

Hi

Thanks for your comments.

I calculated the £300 by working out 5.95% of 5k. Having the additional 5k in our offset account means that we don't pay interest on 5k of the mortgage. As out interest rate is 5.95%, i worked it out to be c.£300, is that wrong?

Thanks
Jen

dunstonh

I calculated the £300 by working out 5.95% of 5k. Having the additional 5k in our offset account means that we don't pay interest on 5k of the mortgage. As out interest rate is 5.95%, i worked it out to be c.£300, is that wrong?

If you cant have it in there then you have not lost anything. You cant lose what you never had.

Also, you could put that £5k in an investment and get 7% at the moment so there is no reason for you to be worse off. Even if you stick to savings and get 3% then you calculate the difference. Loss of interest would only really cover the period that its not in a savings account earning you interest and thats only likely to be a few pounds.

jamesd

jemw, it's wrong because that assumes a full year of gain and ignores the gain you can get on the money by using it in some other way. For example, you might buy back whatever investment you sold then seek the difference between value before sale and value after buy back.

jemw

hi guys

sorry for the late reply, things have been manic recently and haven't been back online

update from co-op though; they called and advised they would honour the 10% off set amount we had been quoted by three of their staff - luckily for us, this means we will now reduce our mortgage period by 6 years due to the offset of interest over the term :-) i never kicked up a fuss or shouted - simply asked the question of whether they would honour the incorrect info :-)