Why do companies add on 2 months or so to a mortgage deal?

domcastro

I've just been caught out by Early Repayment Charges. I took out Further Borrowing on 10th January 2012 on a 3 year fixed deal. I put the house up for sale and plan to complete end of February. I was surprised to see I had ERC as I knew I had taken the money beginning of January. I rang up and they said the deal was fixed until March 30th 2015.

I'm not complaining but then wondered why do the banks do this? A 3 year deal is actually a 39 month deal. Shouldn't they advertise the product as a 39 monther and not a 36 monther?

kingstreet

The rate is usually "fixed until DD/MM/YYYY" unless you buy a product "fixed for x years from completion."

As an example, when we produce a suitability report, we head it "Fixed For Three Years Until 31/04/2018" to confirm the exact date it ends.

The market counterparty providing the rate swap works to end dates as a time from completion means they would have different exposures over varying periods and it's easier to know your liability ends on one final date.