Rising balance on Interest Only?

DarrenBolton

Hello just after a bit of advise as to who is at error with this?

I've recently reviewed my mortgage statements and a couple of years ago we took out some additional borrowing on a interest only repayment.

However it looks like the balance of this has been rising and I've not noticed it until the last statement.

When I spoke with NRAM they said that my monthly payment had been incorrectly set therefore not covering the interest being charged.

They have advised that they can adjust my payments to be correct however will not remove the additional interest that has been added to my account by them not setting the payments correctly.

Is this right? It was an error on their behalf surely I shouldn't be held responsible for them setting the repayment amount incorrectly?

Just after a bit of advise before I ring them back tomorrow.

Cheers

Thrugelmir

Mistakes happen. All you can do is argue your point. Perhaps settle for a reduction rather than a complete write off.

Westminster

You can speak to them on the phone, but I suspect you won't get anywhere until you make a formal complaint - perhaps by emailing the office of the CEO (I had success with this route on a different matter).

DarrenBolton

Will give then another ring tomorrow and see what the deal is.

TrickyDicky101

What's the increase in the outstanding balance?

anselld

So what would you expect if they had set the repayment too high?

Annisele

The Financial Ombudsman Service publishes a technical note on mortgage underfunding. It's aimed at people with repayment mortgages, but I suspect the principles will be the same.

Some of the things the ombudsman service might thing about are:

Whose fault is it that you weren't paying enough? (From what you say, it sounds like it was the lender's fault, because it didn't set the payment high enough).

Should you have noticed? (If you were paying 50p a month on a £100k mortgage with a 4% interest rate, then you should have noticed. On the other hand, if your payment stayed the same when the rate increased, but the lender didn't tell you the rate had increased, then it's much harder for the lender to say you should have noticed).

DarrenBolton

TrickyDicky101 wrote: »

What's the increase in the outstanding balance?

£46

anselld wrote: »

So what would you expect if they had set the repayment too high?

It's money I owe so in one way I wouldn't be fussed as it's eating slowly into the outstanding balance. However on the other hand I'd be doing them out of the additional interest they would be owed should the have set the payment correctly.

I think that in that scenario they would offer the same, to correct the repayment. But I have a slightly negative view of them so would think that they would also ask of me to repay.

Annisele wrote: »

The Financial Ombudsman Service publishes a technical note on mortgage underfunding. It's aimed at people with repayment mortgages, but I suspect the principles will be the same.

Some of the things the ombudsman service might thing about are:

Whose fault is it that you weren't paying enough? (From what you say, it sounds like it was the lender's fault, because it didn't set the payment high enough).

Should you have noticed? (If you were paying 50p a month on a £100k mortgage with a 4% interest rate, then you should have noticed. On the other hand, if your payment stayed the same when the rate increased, but the lender didn't tell you the rate had increased, then it's much harder for the lender to say you should have noticed).

My monthly payment only increased at the time the additional borrowing was added. I should of spotted the rise in outstanding balance sooner than I did.

After thinking about it the most important thing is to get the repayments set right to stop any further increase as after all it's pennies in the scheme of things. I then need to look at remortgaging to get all my mortgage back on repayment.

Thanks for all the input. Will ring them again today.

TrickyDicky101

It is literally £46.00? That isn't very much (so underpayment was easily missed by you) so I am surprised they didn't agree to write it off. If you feel strongly enough state you want to make a formal complaint about it - I would think an ex-gratia payment writing it off in full could result. You have the ultimate option of taking it to the FOS which will incur significant costs on the lender in terms of charges and time.

getmore4less

£46 total over 2 years, payment wrong by £2(ish) per month

Should have spotted that when checking what level the payment was set at.

How much did you borrow, what was the rate, what was the payment?

One issue you get with a fixed payment and daily interest is that the interets changes month to month so you can never get it exactly right.