Is Natwest charging me too much for my mortgage ?

Sunny2good

Hi All,

In February, I received my mortgage statement from Natwest after 11 months of payments.

I took a total mortgage of £168,249 from Natwest. The rate is fixed for 2 years to be 6.09 % and then reverts to 4%. My monthly repayment is £1093.31 which ive paid for the last 11 months, first payment was in April last year.

In my statement i was told that after 11 payments, my balance is 166,397.15. The interest charged so far is £10,174.56 and the capital repayment is £1851.85.

I've used lots of mortgage calculators including Karl's mortgage calculator and other spreadsheets available on this site, and they all tell me that after 11 months of repayments, my Balance should be £165,547.24 and capital paid off should be 2701.76. Interest charged should be 9324.65.

Clearly there is a difference here. Is this something i should be concerned about? Are these calculators accurate enough to challenge Natwest about it ?

Regards,

Sunny

newyear2011

Did you any fees to the mortgage such as arrangement fees?

Wh05apk

How do you think they have got back into profit last year?

I wouldn't read too much into it, I have not seen them, suspect the calculators you have used are crude at best, do they take account of the drawdown date of the mortgage, and that the first month you will just pay interest, being accrued into your first payment, as new year says, did you add any fees?

Sunny2good

Hi guys,

thanks for your replies. I have factored in the fees in the amount. My mortgage amount was £167,450 + 799 arrangement fees. Total is £168,249

Wh05apk - i did not know about being charged interest only in the first month. How does that work? Maybe thats why all calculators will get the amount wrong !!

JSR

When is your interest calculated? Annually, monthly or daily? The calculators usually assume monthly calculations.

Sunny2good

Interest is calculated monthly

Sunny2good

actually just checked, interest is calculated daily

JSR

Was your very first payment £1093.11? It should be higher than this depending on what day of the month the advance was made. The first payment is normally the regular payment for the second month + the interest from the day of the advance to the end of the first month. So really your repayments started in month two but that does not explain such a large discrepancy. If your first repayment was only the regular payment amount I wonder if they have added the first month's interest to the capital?

I would definitely query it with NatWest if you can't work it out. The worst that can happen is you end up slapping your forehead when they explain it.

Sunny2good

Thanks for your input JSR. All 11 payments so far have been the same amout.

I wanted my mortgage to start on 1st march 2010, but the first payment was taken on 1st April 2010 and the payment was for the full amount of £1093.31.

I actually completed and moved into new house on 1st march so everything will work out easier, but sadly it hasn't

TrickyDicky101

The amount of £1093.31 is determined on the basis of payments in arrears so taking first payment on 1st April makes sense to me.

I agree with the mortgage calculators also - based on the information you have given after 11 payments I think your balance should be £165,547 and not what the bank quoted (I just worked this out in Excel using my own formulas).

I would definitely ask NatWest to explain how they arrive at their figure. Good luck with this - customer facing bank staff aren't employed for their maths skills in my experience...

opinions4u

If your mortgage started on 1st March, you have paid 11 payments on the 1st of each month and the statement is dated to 28th Feb then I'd expect the Nat West figure to be right - as you'd have paid 12 months interest but only 11 mortgage payments. The difference is more or less exactly a full month's interest. If the end date is 28th Feb remember the debt will fall by a full monthly payment on 1st March.

What are the start dates and end dates on the statement? Without knowing this to the day nobody can give an accurate answer.