Barclays failed to increase my mortgage payment

rb621

I've just discovered that since the Woolwich to Barclays transfer, my mortgage payment has NOT increased with each interest rate rise.

So my offset mortgage of 25 years is now forecasting to take 28 years and 10 months at my "current contractual payment".

I'm now tyring to ascertain why they have not increased it and what my payment should really be. I did not ask them to leave it.

But, how much has this error cost me in terms of interest?
And can I get them to refund it?
I'm going to try.

Anyone else had a problem like this?

mad

My payment has not increased either, other than the first of the last four. I am assuming this is because they adjust it annually, so for me this will happen pretty soon. That will mean I have a pretty big hike which I am anticipating but also means what I have not paid extra will be added in to the total outstanding. The reverse of this would be in a year were the rates fall and I coontinue to pay that set for the year so pay more off if you know what I mean. Anyway you have prompted me to get in touch with them to make sure they do make the changes because you can bet you will have to pay.

Slightly more worrying is the fact that they may up the rate on my tracker as well because they are having to pay higher LIBOR rates. Halifax have just done this today...

rb621

Thanks for the reply.

I've just been going through my mortgage documents and discovered on page 3 of my first annual mortgage statement that yes, they only review the payments on the mortgage once a year, 30th September for me.

I'm now tring to find in my documents when I took out the mortgage if they state that this is how it was supposed to be.

And there I was thinking that as the bank rate increased my payment would go up straight away.

Surely this is another little trick by the bank to squeeze a little more interest out of you?

You are right - in effect we are underpaying the mortgage when in a rising interest rate market, thus the bank earns more interest as our outstanding balance is higher than it would have been.

This tactic works against the principal of offsetting - here we are trying to reduce the debt and thus the interest being charged and this trick is adding interest back on.

Hats off to the bank - I didn't see that trick after 2 years into my mortgage.
I guess what we need to do is, if we stick with them, either get them to automatically increase it as the rate rises or manually change the payment ourselves.

Is this trick particular to the Woolwich/Barclays bank or is it a general thing with all suppliers of offset mortgages?

MRSTITTLEMOUSE

You can arrange for them to adjust it everytime interest rates change.I just rang them and they do this each interest change and write and tell me of the adjustment,without me having to do anything.This has been with 3 different companies so I think most must do it.

dunstonh

annual adjustments are a common option with lenders and you can choose to have them or not.

gsamsa

I've asked a building society about this issue as well and they told me that they update the mortgage account balance each six months, so the extra payments you would have done in case of a drop of interest will be placed when the account is updated.

Maybe they do the same in Barclays and they charge you a couple of pounds more when they update your file due to the increase of the interest. What the mortgage advicers think?