Barclays won't honour my mortgage contract - charging larger monthly payments

MatDixon

Hello, I hope someone is able to shed some light on this for me as I have been in dispute for over six months now and I am extremely perplexed about the information I am being given...

Barclays have increased my contractual monthly payments (CMP) above what was agreed when I started my new fixed-term period with them. It is not a small amount, in fact it is almost £1200 over the course of the three year fixed term, and I cannot for the life of me see why it has happened:

My mortgage was arranged for around £257,000 (the account balance at the time of discussions with the adviser), plus the product fee which equates to 39 payments of £908 (@1.75% fixed). The mortgage term was 30 years, 5 months.

I was told the amount will probably reduce slightly by the time this new rate kicks in as I would have paid a bit more into my balance by that point (obviously).

After my contract bagan, the payments they are actually taking from me are £941.

Through much back and forth correspondence I won't go in to - but it included incorrectly adding an early repayment penalty to my account of £7,656 for a one-off overpayment of £8000 I made in December prior to my new contract. A figure that was totally within my allowance so should not have been charged) - I am now in discussions with the Financial ombudsman.

They have found that the reason for the difference in figures is something they call "GCAL". I cannot find any reference to this meaning so I am going to assume this is short for general calculation, unless anyone can advise otherwise.

Unfortunately I cannot paste their calcs on the forum as a new user, which doesn't help...

Basically they state the GCAL figure is different to my account balance because the one-off overpayment I made during my previous contract was to shorten the term, and not a part-redemption. This is correct, I applied it to clear my debt quicker. But because of this it is pretty much scratched from my balance, so they are charging me on a balance of £263,400, as apposed to £257,066 (my actual balance). Which makes my overpayment kind of pointless really.

What I cannot fathom is why a so called interest-free, penalty-free payment made towards my balance prior to this new contract is being used to INCREASE my monthly payments now, when the term length being calculated in both scenarios is exactly the same!?:mad:

Why is it not calculated on my account balance? I cannot see any reason why an overpayment has any bearing on anything; it goes straight towards the balance of my account. What I choose to negotiate regarding term length and monthly payments is totally up to me -
I've started a new contract, right? I could have moved providers and would not be susceptible to this GCAL from what I can gather.

Apologies if I have broken any forum etiquette, I am not a frequent user. I did try and search for threads similar to this but wasn't really sure what this would fall under.

Thanks for any insight,
Mat

AnotherJoe

This may be wrong but ........


Overpayments can be used to shorten the term or reduce the monthly payments, usually you get a choice but if you dont specify which, there is generally a default which they will pick for you.


It would seem you picked or were assigned the faster pay off. A faster pay off will by definition increase the monthly payment.


With me, when i overpaid barclays kept reducing the amount they took (keeping the term the same) even though i didnt want that, i wanted to reduce the term, but they kept "forgetting" and in the end i gave up and just increased the overpayments to compensate.


In your case it seems by choosing faster pay off the amounts have gone up even including the decreased account balance. Note also that the term length can also be misleading, if you carry on overpaying £1200 every 3 years then your mortgage will end quicker whatever the theoretical length is. "thats just how it works"



If you are paying £1200 more over 3 years, this isnt being lost, essentially it will come off your mortgage balance at the end, indeed a little but more than £1200 will come off as you will have paid a bit less interest as well.

enthusiasticsaver

Normally you have to specify when you make an overpayment whether you want to reduce the term or the monthly payment. It should still be reflected in the balance though so I am guessing the difference is this erroneous ERC. I am not sure why this has to go to the financial ombudsman. Is Barclays disputing the charge? Surely it is easy to find out whether the £8000 overpayment is within your overpayment allowance? Sorry I can't be more help but it seems to me that there is a problem with Barclays calculations so I agree you should ask them to explain further. I would be seriously ticked off about that ERC too.

AnotherJoe

My bad i missed the erroneous ERC in there.
So that seems to be the issue.

getmore4less

trying to extract the numbers( problem is you missed some important details)

MatDixon wrote: »

Hello, I hope someone is able to shed some light on this for me as I have been in dispute for over six months now and I am extremely perplexed about the information I am being given...

Barclays have increased my contractual monthly payments (CMP) above what was agreed when I started my new fixed-term period with them.

It is not a small amount, in fact it is almost £1200 over the course of the three year fixed term, and I cannot for the life of me see why it has happened:

My mortgage was arranged for around £257,000 (the account balance at the time of discussions with the adviser), plus the product fee which equates to 39 payments of £908 (@1.75% fixed). The mortgage term was 30 years, 5 months.


£257,000(inc fee or not?)
1.75%
30y5m


I get £908.55, good so far.


I was told the amount will probably reduce slightly by the time this new rate kicks in as I would have paid a bit more into my balance by that point (obviously).

unlikely as each payment shortens the term but not relevant for this

After my contract bagan, the payments they are actually taking from me are £941.

Through much back and forth correspondence I won't go in to - but it included incorrectly adding an early repayment penalty to my account of £7,656 for a one-off overpayment of £8000 I made in December prior to my new contract. A figure that was totally within my allowance so should not have been charged) - I am now in discussions with the Financial ombudsman.

so the actual mortgage is for
£264656
1.75%
30y5m

I get £935.62pm

or is it?
What was the actual balance and term at the point of changeover?




They have found that the reason for the difference in figures is something they call "GCAL". I cannot find any reference to this meaning so I am going to assume this is short for general calculation, unless anyone can advise otherwise.

Unfortunately I cannot paste their calcs on the forum as a new user, which doesn't help...

Basically they state the GCAL figure is different to my account balance because the one-off overpayment I made during my previous contract was to shorten the term, and not a part-redemption. This is correct, I applied it to clear my debt quicker. But because of this it is pretty much scratched from my balance, so they are charging me on a balance of £263,400, as apposed to £257,066 (my actual balance). Which makes my overpayment kind of pointless really.

2 new numbers, but the rest of the info is missing like what is the term for these numbers

you say 6 months have gone for
£263,400
1.75%
29y11m
I get £942.97pm
for 30y £940.98 which is probably the term being used for that balance.

all making sense so far


What I cannot fathom is why a so called interest-free, penalty-free payment made towards my balance prior to this new contract is being used to INCREASE my monthly payments now, when the term length being calculated in both scenarios is exactly the same!?:mad:

That's one problem work on that single point why have they added an ERC?


Why is it not calculated on my account balance? I cannot see any reason why an overpayment has any bearing on anything; it goes straight towards the balance of my account. What I choose to negotiate regarding term length and monthly payments is totally up to me -
I've started a new contract, right? I could have moved providers and would not be susceptible to this GCAL from what I can gather.

Apologies if I have broken any forum etiquette, I am not a frequent user. I did try and search for threads similar to this but wasn't really sure what this would fall under.

Thanks for any insight,
Mat

Mortgages are relatively simple balance, rate, payment/term(they are linked).

Your problem seems to be the balance is wrong because they added an ERC.

should be able to fix that then it should be OK.


Extract the main details from their calculations
From what you have said they look OK to me but worth checking.

And don't worry about the higher payment that does not disappear it pays the interest and what's left pay off capital, once the ERC is sorted and any interest charged on that refunded everything should be back to normal.

IT should not have taken 6 months to fix the erroneous ERC.


Should add with a shorten term
£265k 30y 5m 1.75% £937pm
£257k 1.75% £937pm would be 29y3m

Not clear from your posts what the old(pre £8k) & new(post £8k) terms are.

AS far a I can see the ONLY thing wrong is the ERC being added to the balance(or as a separate balance on the side).

MatDixon

Thank you all so much for your feedback,

@getmore4less,
Your figures all make sense but it's even more straight forward than that:
I only needed to borrow the £257,066, as I'd just paid in the overpayment of £8000 a month beforehand. And yes I requested this payment be used to shorten my term. Not that it mattered as I was coming to the end of my previous contract with Barclays so I would have the opportunity to respecify exactly what I wanted to pay and for how long when I took out this product, Just as I would if I was switching providers.

So £257,066 for 30 years 5 months plus the product fee they calculated at £908 p/month fixed for 3years followed by variable.
And yes this 257,066 is acknowledged in my account balance.

This is where they totally lose me:
They say although my account balance was £257,066 when I signed up to the new contract, the monthly payments are actually calculated on the balance of £263,400. This is because "I requested the overpayments be used to shorten my term, thus it will result in a higher monthly payment. If I wanted to reduce my monthly payments I should have applied the overpayment as a part-redemption".

The above statement is totally irrelevant. I didn't want a part redemption. And the payments were already agreed on my current balance. I did not make this overpayment adjustment after this contract was negotiated. The monthly payments and the term length were agreed on the amount of £257,066. There is no adjustment. There is no change of term length.

My revised monthly payments of £941 still have the same term length I agreed to! Surely if I'm paying more per month for the same amount of borrowing I'd obviously see a shorter term. But it seems they want me to pay more for the same deal. Same term length. They seemingly plucked a previous figure out of the sky (£263,400) and are using that to calculate my payments. I'm at a complete loss.

Also the ombudsman has now confirmed the early repayment penalty was removed from my account, so it isn't this.
The only other factor I can think of is I was paying £100 overpayment p month on my previous term which fixed my monthly payments at £1066. They are still collecting that fixed amount now, instead of adjusting it according to my new contractual payment. I.e. £908+100 (£1008), or £941+100, depending on what figures you're quoting.

No-one has made any reference to this overpayment amount. I assume as it's a voluntary payment it should have no bearing on my contractual monthly obligations. I would have just removed it if I'd known it would cause such a cloudy set of figures.

My time with the ombudsman is running out so I have to now request a second opinion which they say is "final". They acknowledge the poor customer service but will only award me the £400 barclays previously offered to compensate the last 6months, which isnt great if they're taking £1200 off me for no good reason. They also offer no action plan to avoid the same scenario happening when I get another "adjustment" letter through the post.

I'll let you know how I get on. It makes me feel completely stupid like I am missing something obvious, and that I'm being punished for paying a huge chunk of my savings into my mortgage without any real benefit. I always thought this was the responsible thing to do!

Thanks all,

MatDixon

MiSorry some corrections to above first paragraphs :
Product "fee" not free
£257,000 not £157,000 in my account balance

Thrugelmir

MatDixon wrote: »

Not that it mattered as I was coming to the end of my previous contract with Barclays so I would have the opportunity to respecify exactly what I wanted to pay and for how long when I took out this product, Just as I would if I was switching providers.

You can ask the lender not specify. As your contract has not come to an end. The product has. The lenders general terms and conditions ( i.e. non product specific) remain in place.

Thrugelmir

MatDixon wrote: »

My time with the ombudsman is running out so I have to now request a second opinion which they say is "final". They acknowledge the poor customer service but will only award me the £400 barclays previously offered to compensate the last 6months, which isnt great if they're taking £1200 off me for no good reason.

What outcome are you hoping for? The higher repayments totalling £1,200 aren't lost. Your mortgage balance will simply be reduce quicker. Incurring you less interest. At the end of the next fixed term. Your mortgage will be recalculated to repay the balance over the remaining term.

GDB2222

"an early repayment penalty to my account of £7,656 for a one-off overpayment of £8000"

This is the bit that's utterly perplexing. Clearly, nobody in their right mind would pay in £8k to have nearly all of it swallowed up in charges. So, I am really surprised that Barclays won't sort that out for you. Even if they are contractually entitled to the money (and I note that the OP says they are not), they ought to deal fairly with the OP and waive the charge.

GCAL - why not ask Barclays what it means? It sounds like their jargon used inside the bank.

MatDixon

Thrugelmir wrote: »

What outcome are you hoping for? The higher repayments totalling £1,200 aren't lost. Your mortgage balance will simply be reduce quicker. Incurring you less interest. At the end of the next fixed term. Your mortgage will be recalculated to repay the balance over the remaining term.

If this is correct then yes I'd be fine with that outcome. It's just their current figures show the term finishing at exactly the same date, even though I'm paying more each month. Maybe this is recalculated over time but at present it really isn't clear