mortgage in arrears over 2 years we were not told

tk

unbelievable in this day and age but true. How can they do this i wonder.
Maybe its because our mortgage interest is paid by the benefits agency and as such our account is now only reviewed every 12 months. therefore the difference needed to meet the monthly payment has not been altered. Previously it was at every interest change, we think the bank decided to change this without notifying us. Therefore our arrears have built up over an astounding 30 months!!!
We were finally told we were in arrears this week because changes to the terms and conditions mean the lender can now charge £40 each month an account is in arrears, therefore we have now also accrued 3 months charges on top of the arrears! After a phone call we have managed to waive the charges and had enough in savings luckily to pay the arrears, but heaven forbid we had a large mortgage we could have lost our house because of this.
I know ignorance is no excuse but we didnt know!! if you have your mortgage interest paid by the benefits agency i hope your lender hasnt done to you what ours did to us!

Fran

tk -

I'm pleased you managed to sort that one out!

It might be useful to someone if you copied this onto the Mortgage board too.

Ted_Hutchinson

From DWP A Guide to Income Support
How much help will you get?
The standard interest rate
In calculating the amount of interest payable on a loan which Income Support can help with, the standard interest rate will be used. The standard interest rate is set by Parliament and will be changed from time to time. The rate of interest charged by your lender is not used to work out your Income Support housing costs unless it is below 5% when your housing costs become payable.
In this case the actual rate charged to your account at the time of your claim will be used until your actual interest rate rises to 5% or above. When this happens the calculation will be changed and the standard interest rate will apply.

The DWP Standard Rate was 5.7% but changed in March to 5.33% see
The Income Support (General) (Standard Interest Rate Amendment) Regulations 2004

So in order to ensure this doesn't happen to you keep an eye on your mortgage payments to check that there is no discrepancy between the amount you think is being paid and the actual amount the mortgage provider is getting.

cattie

My mortgage lender used to automatically debit my account after a change in interest rate if there was a shortfall in interest payments received from the (then)DSS. A couple of years ago this changed though & after making a query to my lender after being informed I had a small amount of arrears,I was told by them that it was now my responsibility to check with them that my account was not falling into arrears whenever there had been a change in interest rates. I explained that I wasn't always aware when there was a change & was advised to phone in every now & then to check if I needed to increase my monthly payment.
I decided the best thing for me was to pay a few pounds extra each month on my mortgage payment to avoid finding myself in arrears, but I'm aware that even a few pounds extra each month on the mortgage is not possible for some people.