monthly payment doubled because of Mortgage Arrears

fairygal44

After my mum died I fell into arrears on my mortgage. I would get the monthly arrears letter at a cost of £35 telling me how much were my arrears and what my next payment would be. One month I noticed that the mortgage payment on my monthly arrears letter had nearly doubled.

My head not being in the right place I paid what I could and didn't question it. As my payments had practically doubled this meant my arrears just grew and grew. I had the threat of repossession which didn't help with the depression I felt with losing my mum. Being her carer I took it really hard.

Anyway just before being repossessed I agreed a payment plan with them and as I paid on time for the 6 months they are now offering me consolidation. But after seeing the news this morning about halifax double dipping I'm wondering if I've been treated fairly.

so I'm just wondering now, is this what happens to everyone when you go into Arrears??

I have one year left on my mortgage on a 25 yr mortgage. I have 85% equity. I'm thinking now is this action of doubling your mortgage payment so that you have no hope of making full payment a way of making you lose your house??

should I complain or is this just normal??

thanks xx

stator

Ask them for a breakdown of the charges. They can't just double your payment as a penalty, but if the extra charges and interest add up to double then that's normal.

fairygal44

stator wrote: »

Ask them for a breakdown of the charges. They can't just double your payment as a penalty, but if the extra charges and interest add up to double then that's normal.

Would a breakdown of charges not just be a list of the £35 fees?
they are listed separately on my mortgage summary.

on my summary it lists the fees, amount paid and amount owed. Should I maybe ask for a breakdown of the amount owed to see how much is interest ??

They didn't explain why my mortgage went up. All I know is that if my payment had stayed the same my arrears would have been cleared by now but with the doubled payment all the money goes to the monthly payment and my arrears are still the same.

I'm going to go in on monday, so just trying to think of all the questions I should ask

ACG

If you only have 12 months left to pay and you fell into arrears it would not take a lot for your payments to double - especially with the charges on top.

If your mortgage still had say 20 years remaining then you effectively have a longer period in which to bring the arrears up to date.

fairygal44

ACG wrote: »

If you only have 12 months left to pay and you fell into arrears it would not take a lot for your payments to double - especially with the charges on top.

If your mortgage still had say 20 years remaining then you effectively have a longer period in which to bring the arrears up to date.

it shows what little I know about mortgages. I moved away from an endowment mortgage many years ago so I wouldn't have a huge amount to pay at the end with endowments not performing well .

I thought with a capital repayment they would adjust figures only slightly to accommodate changes in rates. I was approx £1600 in arrears when they doubled my payment , surely that doesn't equate with such a dramatic rise in mortgage payment.

If they would have kept the rate the same my arrears would have been paid off, if that was the case, I take it the huge rise in mortgage payment would still have happened anyway, was it some kind of recalculation? All other changes to monthly payment have been with change of rates, it's only varied a few pounds over the years.

gonna have to read up a bit I think lol
thanks

ACG

Your not really giving us enough information.

How much was the balance before the arrears?
What was the rate before the arrears?
How much in charges have they added?
What is the rate now?
What were your monthly repayments?
What are your monthly repayments?
When id your mortgage due to finish?

I think that should enable some of the more mathematical people to be able to work out whether its correct or not.

getmore4less

How long ago did you start getting behind on your payments?

How much do you owe then and now?

getmore4less

what happened to the endowment?

Tigsteroonie

My understanding of a repayment mortgage - admittedly I am a lay person on the subject - is that at the start, the payment is mostly interest and only a tiny bit of capital repayment; as time goes on, the balance changes and, towards the end, the payment is a small amount of interest and largely capital.

That might explain how arrears could effectively double the payment - each month you missed, you'll need to pay almost double for a month (twice the capital part).

stator

If it's really causing you trouble you could ask them to extend the mortgage term instead and that would lower your payments. They can only say no

nidO

fairygal44 wrote: »

I thought with a capital repayment they would adjust figures only slightly to accommodate changes in rates. I was approx £1600 in arrears when they doubled my payment , surely that doesn't equate with such a dramatic rise in mortgage payment.

They adjust figures to ensure you pay back what you owe in the time you owe it, they won't just be arbitrarily changing what you owe, and I think the fact that you had 1 year left on your term is as mentioned above likely to be the crucial factor.

A random example:

You have 12 months left on your mortgage, and £6000 outstanding, and monthly payments of £500, which would clear the remaining £6000 in the required 12 months.

You begin falling into arrears and make no payment on month 1 of the 12.
You now owe £6000, plus the mentioned £35 arrears letter fee, plus interest on the money you didn't pay back this month over 11 months, ie £548.63 a month plus the additional interest owed (which would be very small at this stage, if your rate is 3.99% for example this would add roughly a further £11 to your total with recalculated payments, pushing your monthly payment up by another £1)

You don't make any payment in month 2 either, now you have 10 months left on your term and still owe £6000 plus £35 plus £35 plus the interest on 2 monthly payments you haven't made, ie £607 a month plus the additional interest owed.

The end result is that if you don't make any payments for 6 months, you still then owe the remaining £6000 over the remaining 6 months on your term (so double the monthly payments right there) plus 6 months of these arrears letters fees, PLUS an additional 6 months of interest on the £3000 you haven't paid back that your original balance outstanding was calculated on the basis that you would.

I wouldn't say there's any reason to assume they've acted unfairly, assuming the above is an example of what has happened to you.
I suppose you could argue that "fairness" might have been offering you an additional year's extension on your mortgage but then they were sticking to the term agreed, did you actually contact them when you began struggling with repayments as my understanding is they should come up with a range of options at that point.