2 years Mortgage 28 payments?? why not 24??

tellme_why

Hi,

I have received 3 quotes for 2 years - Fixed rate - 20 years period Mortgage.

Mortgage 1: 28 payments base rate followed by 212 higher rate
Mortgage 2: 26 payments base rate followed by 214 higher rate
Mortgage 3: 25 payment base rate followed by 215 higher rate.

What I expected to see:
24 payments base rate followed by 216 higher rate.

Anyone knows why banks advertise a "2 years mortgage" when in reality is 2 years + 2 months or even 2 years + 4 months???

Many thanks

Annisele

Quite often the rate is fixed until a particular date - and that date is the same for all the customers who choose that fixed rate.

So, a bank might advertise a rate fixed until 30 June 2017. If you take that fixed rate today, you'll get it for 26 months plus a bit. If you take it on 1 July 2015, you'll get it for exactly two years.

I think it's to do with the way banks arrange their own funding; I guess it means they can arrange funding for a whole bunch of loans all at once.

mrginge

As above.
Banks arrange a tranche of finance with a fixed repayment date. They then lend that out to customers as a fixed deal.
Some people take out that lending early and get additional months, some people may take it later and get less.

If the bank drew down each mortgage individually with different repayment dates it would cost them an awful lot of money.