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HSBC mortgage - hidden charge in the repayments?
jaygatsby
Posts: 6 Forumite
I am taking out a £150,000 mortgage from HSBC at 2.19% for 25 years. I just got my KeyFacts and there it lists 299 repayments of £649.91 and one final repayment of £649.53. However, if you plug in the same numbers into any mortgage calculator (including the one on this website) or use the PMT function in Excel, the monthly repayment comes to £649.75. I know that a difference of 16p per month would rarely raise eyebrows but over the term of the loan, it amounts to just under £48. So it looks like HSBC are using a different formula to calculate monthly repayments which results in this hidden fee that's spread throughout the term of the loan.
When I confronted them with this, they of course knew nothing about the formula that's used to calculate repayments and said that the "system" does these calculations automatically. The best answer they offer was that they are FSA regulated and that FSA checks these "systems" to ensure they are accurate and that the websites only give a "ballpark figure".
What do you think? Have you come across anything similar? I know the difference is only small but I just feel it's below the belt that they are sneaking in this £48 charge. And if they're not hiding anything, then they should be public with the formula they use for their calculation and justify why they are using a different one to what appears to be the standard.
When I confronted them with this, they of course knew nothing about the formula that's used to calculate repayments and said that the "system" does these calculations automatically. The best answer they offer was that they are FSA regulated and that FSA checks these "systems" to ensure they are accurate and that the websites only give a "ballpark figure".
What do you think? Have you come across anything similar? I know the difference is only small but I just feel it's below the belt that they are sneaking in this £48 charge. And if they're not hiding anything, then they should be public with the formula they use for their calculation and justify why they are using a different one to what appears to be the standard.
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Comments
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Mortgage interest is calculated on a daily basis , charged monthly.
So you'd need to do the calculation on a month to month basis to arrive at the figure, due to the variable days in a month.0 -
Assuming the mortgage is a standard one with repayments in advance rather than in arrears then the repayments come out at £648.56 a month (using Excel's PMT function). I think it's a valid question to ask how they are calculating it (also taking into account what Thrugelmir said).0
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Are there any fees added to the loan on your KFI?0
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It really isn't worth worrying about. But ask the lender if you really want the clarity.
You could try the BBC caluclator and pay £654.53.
Or there's Money Supermarket who agree with the £649.75 figure.
Looks to me like a £30 completion fee may have something to do with it, although the figures still don't reconcile to the penny.0
This discussion has been closed.
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