Home Insurance added to Mortgage

michelle.allen_2

Hi,

I'm not sure if this thread is in the right area! (I'm a noob!)

Anyway, to cut a very long story short, I have found out that my annual Home Insurance payment has been addded to my mortgage for the last 4 years even though I thought I had been paying direct debit for this. This has run up a debt of roughly £1200. I have contacted my bank manager who has looked into it and offered me a refund of the interest totalling roughly £200 and £25 to ease my distress.

I'm not happy about this situation anyway as if the standard variable rate had not increased and raised my monthly payment (which I thought odd as I'm in a fixed contract!) I would never have found out this was going on!

To be honest, I am not happy to pay any of this money as I thought I had been paying monthly.

Am I right in refusing this offer and not wanting to pay any of it? I would also like to know where I stand legally (if at all!)

Thanks in advance for any advice, I'm furious about this!!!!

Michelle.

Dave_Ham

So firstly, I assume we are talking about Halifax..?

So have you not been paying for the home insurance for the last 4 years? Or been doing both paying and they have been adding on mortgage - sorry it is not clear to me...?

michelle.allen_2

Yes, this is Halifax.
Yes we have been paying but it has been paid annually and added to our mortgage. When we set up the mortgage in 2008 we asked that everything be set up direct debit, and assumed it had. Even at previous mortgage reviews, when asked who we were with and how we paid we said we are through Halifax and that it was direct debit and this was never questioned.

Sorry this wasn't clear!

Dave_Ham

Ok - so you have not been paying monthly, you assumed the cost was wrapped up in the one direct debit and they assumed you were happy to add to mortgage.

This must be a relatively old mortgage as they stopped doing this (to my knowledge) some time ago..

Have you had any claims in the last 4 years?

michelle.allen_2

Yes, we thought our "insurance" payment we make monthly included Home and Life Insurance, turns out it was just Life. Yes, when we set up the Mortgage in 2008 we said we would like it to be direct debit, they did not listen to this and set it up to be added annually to the mortgage!

No we have not had any claims in the last 4 years.

We do receive an annual renewal price but I assumed they sent this out of courtesy!

Dave_Ham

To be honest, I do not know how they will react to this.

Even then, I thought they had stopped adding to mortgage as you would be paying interest longer than the duration of the product (1 year renewal)

You have had the protection and not used it and therefore unsure if they will just bill you for this or leave it on your mortgage until you pay it off.

Technically if they have removed the interest from the payments to the mortgage, then you are no worse off as you have not paid for it nor the interest.

I can understand your frustration as ultimately this is a bill that you are not expecting, but to be fair you have not paid for it and you have had the protection.

I am not convinced that ignorance to the amount you were paying is going to be good enough and fear they will not write this amount off.

Best you can do is fight for a better goodwill payment and try and do a deal with them - in my opinion only..

Good luck

michelle.allen_2

My mortgage payments have increased due to this "loan b" by £2 a month so I presume the cost will be spread over the term of the mortgage?

It just frustrates me that I now have had £1200 added to my mortgage for no reason as I thought I had been paying monthly. If I wanted to add a loan to the mortgage I would of used the money for home improvements, but now I am stuck paying for something that is not my fault!

Dave_Ham

michelle.allen wrote: »

My mortgage payments have increased due to this "loan b" by £2 a month so I presume the cost will be spread over the term of the mortgage?

It just frustrates me that I now have had £1200 added to my mortgage for no reason as I thought I had been paying monthly. If I wanted to add a loan to the mortgage I would of used the money for home improvements, but now I am stuck paying for something that is not my fault!

I appreciate the frustration, but technically you have not been paying for the insurance and therein lies the issue.

I think there has been failings on both sides in this process; the bank have misconstrued your instructions and to be honest this is bad practice in any case. You have had insurance that you have not really paid for and now are upset about it.

You need to moan a bit, but do a deal as technically you are liaible for it all..

dunstonh

As there is no duplicate household policy in place then there appears to be no wrong doing.

It is a mandatory requirement to have buildings insurance. So, getting a refund when you havent had it elswhere doesnt seem logical.

Halifax do issue an annual renewal on the home insurance and it does appear on the bank statements. Halifax should alter the direct debit for these automatically. However, some people still pay by standing order and they are required to alter the standing order as Halifax cannot.

Is yours direct debit or standing order?

By wiping out the interest and giving £25 inconvenience, Halifax have effectively put you in the correct financial position plus £25. You may be able to push for a better goodwill payment but make sure that the fault isnt yours in some way before going in too heavy with them (e.g. you didnt take much notice of the renewal letters or if you are paying by standing order).

michelle.allen_2

I thought I was paying direct debit but it turns out I am not.
I have received a monthly payment calculation summary with a loan a and loan b. Loan a I presume is my mortgage payment and loan b i presume is this insurance payment.
I have two payments come out direct debit each month for halifax. One is my mortgage payment and the other is my insurance payment. The insurance I assumed to be both Life and Home but it turns out this is just life.

From what Dave has said, yes it looks like I have not paid anything up until this point (even though I thought I was) but now it looks like the balance of loan b has been spread over the remaining term of the mortgage.

Dave_Ham

That is exactly what has happened.

They have therefore not disadvantaged you if they have removed the interest and therefore loan b, although they will want paying..

Push them hard on the goodwill side and try and meet somewhere near to the middle, I still do not feel they will just buckle so do not over do it or you could get the whole 4 years bill land on your doorstep..