Help please with mortgage

ali137

I have a mortgage with birmingham midshire and the mortagage was taken out in April 2008 on a 3 year fixed rate interest only on a balance of £226,549 (£ 223200 amount borrowed + £3,349 arrangement fee added to mortgage). I had a look at my 2 years statement and the £226,549 has increased each year. I called the company and they are trying to sort this mess.

I am really worried and I would like to know if any one who has taken out a interest only mortgage had this problem.!

I thought interest only mortgage means the amount borrowed remained the same, you are just paying the interest.!

Crashandburn

Doesnt sound right.

How much has it increased? There is a bit of fluctuation due to number of days in the month etc but shouldn't add up to loads

ali137

last years statement is showing over £227k. This has totally ruined my day thinking about. My interest rate is 5.59% on £226,549. This figure includes the arrangement fee.

Thrugelmir

Is there a timing difference?

For example. If interest is calculated and charged up to the 31st December but you make you normal payment on the 1st January. Then your statement at the 31st December will show a higher balance than you originally borrowed.

hcb42

I think as the increase is marginal, it is normal. I wouldnt worry over it, providing you have a decent repayment vehicle in place.

blueberrypie

Have you missed any payments or made any late payments?

If not, I suspect thrugelmir's explanation above is the most likely explanation.

ali137

My payemnt are on the 25th of every month. Mortatge taken out in April 25 2008 first payment with may 25th 2008. Statement period is from 25th May to 25th April each year.

On the statemnt it also states that my account type is Combination (repayment+ interest )

By mistake a £50 fee (for not taking out house insurance with legal and general which i did) was also added to the account which i just noticed. Mybe the ineterest was based on the £50. I think i have to send a copy of the insurance to them to get the £50 fee off.

I have never missed payments.

shortchanged_2

ali137 wrote: »

My payemnt are on the 25th of every month. Mortatge taken out in April 25 2008 first payment with may 25th 2008. Statement period is from 25th May to 25th April each year.

On the statemnt it also states that my account type is Combination (repayment+ interest )

By mistake a £50 fee (for not taking out house insurance with legal and general which i did) was also added to the account which i just noticed. Mybe the ineterest was based on the £50. I think i have to send a copy of the insurance to them to get the £50 fee off.

I have never missed payments.

Do you have a repayment vehicle in place?

ali137

I pay £1055.33 ineterst only direct debit each month.

I think the repayment they are talking about is based on the £50 fee that they bloody added by mistake when the mortatge was taken out. Even so how can £50 incur so much ineterst easch year???

shop-to-drop

Don't they sometimes add an amount to the mortgage in the early days to pay for some sort of insurance against the high loan to property value ratio? Could it be this?

ali137

£3,349 was the arrangement fee added to the mortatge. Which made the total of the £226,548. (£226,548 divide by 100 x 5.59% divide by 12 months = £1055.33 each month)

If i was meant to pay repayment why did the company not increase the £1055.33 i pay each month.

By the way thanks to everyone who is replying to my thread.