Mortgage payment doesn't match the calculator??

STAR_BUCK

Hi

I'm confused! We completed on the purchase of our house last week. Got a mortgage for 230,000k at 4.89% (fixed for 2 yrs) for 25 years. Our building society has said monthly payments will be £1344.

However when I use the egg mortgage calculator ( or any other mortgage calculators) and punch in the above statistics, they says my monthly payments ( at 4.89%) should be £1329.86.

Has anyone else had a similar anomaly? I'm thinking about enquiring with my lender on this?

AndrewSmith

Have their been any fees or charges added to the loan?

The extra payment indicates approx £2,440 above the £230,000 you stated.

Andy

roswell

do you have a house insurance policy with the mortgage or any life cover?

STAR_BUCK

Nope we've taken out our insurance policies with other, cheaper companies. The mortgage payment is purely based on the loan.
I rang the mortgage manager at my local branch but he said I need to ring head office as they've processed the application form.
I'll have to ring them tomorrow when I have all my paperwork with me

Leon_W

You don't say who the lender is Starbuck, but I just ran your figures through my calculator and I concurr with Andrew IF the interest is calculated on your loan DAILY

I also ran the figures through using an Annual Capital Rest Period and guess what ? Yep, £1344.97

I'm therefore guessing that the interest on your loan is calculated annually as opposed to daily.

AndrewSmith

Reakon you have hit the proverbial nail Leon. Well spotted that man.

regularsaver1

Shows what a difference daily interest can make - and not every lender offers this still

Leon_W

Lets see if my radar is tuned right in.

There aren't that many lenders who use annual rest periods nowadays. I would dismiss Halifax and Alliance and Leicester because the poster says "building society" (Both of these still have mortgages available using this method so read the small print !)

And discounting some of the smaller building societies like National Counties and Vernon on the basis that they are just that, small. I put it to you that Starbucks lender is, ipso facto, Leeds Building Society !!

Please update us Starbuck and if I'm wrong I'll get me coat.

Regards

regularsaver1

Halifax only do daily interest Leon - there are some old mortgages still on annual, but they can be changed if asked to do so. All new mortgages will be calculated at daily interest and have done so for some time

Doesn't Britannia do annual or is monthly interest?

Leon_W

For some reason regularsaver I have Halifax transfer products on annual ? Will check that one. They still have the selection box for "How would you like the interest calculated" on their form as far as I am aware ,but as I've never selected "annual" it may not work, so therefore they would all be calculated daily.

Britannia are daily. But there are still a few lenders who do it monthly, First National, Preferred, I Group, Kent Reliance, Kensington, Platform etc and as you say, it is important to find out on what basis the interest is calculated as it can add thousands over the lifetime of a mortgage.

That said, I don't really have a problem with monthly as the difference is pretty small. Annual is the problem.

regularsaver1

Yes if a Halifax mortgage customer borrows additional money and their existing mortgage is on annual (as older ones were) - then the further borrowing must be on the same calculation. However, the existing mortgage could be changed to daily prior - and then all the mortgage can be on daily.