Birmingham Midshires Loan

edited 30 November -1 at 1:00AM in Loans
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MisteeqMisteeq Forumite
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edited 30 November -1 at 1:00AM in Loans
Hi,

Hoping someone can help please.

In 2008 I took out an unsecured loan with Birmingham Midshires of £21,300.00. I have repaid a total of £14,647.38.

Today, I called Birmingham Midshires to request a settlement figure as I am intending on paying off the loan in full (not with another loan).

They advised me that my settlement figure was £15,334.02.

Can anyone advise why the settlement figure is so high? I had assumed it would be around £6,652.00?

I have today queried this with Birmingham Midshires and they have advised they will look into this for me and advise me within 8 weeks.

Any help or advice would be greatly appreciated.

Many thanks.

Replies

  • Gaz83Gaz83 Forumite
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    At the start of a loan, most of your repayments are to cover the interest on the loan, with a smaller amount going towards the capital (actually "repaying" the loan). That's why.

    Not sure why you expected you wouldn't pay any interest. What was the interest rate?
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  • Nebulous2Nebulous2 Forumite
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    What was the interest rate? How long was it over?

    Looking at your repayments and estimated outstanding total it doesn’t look as though you have allowed for interest.

    There are quite a few loan calculators online, if you plug your figures into one of them and play around with it you should see how accurate their settlement figure is. There may be 2 months interest to pay for early settlement.
  • BoGoFBoGoF Forumite
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    If you borrowed £21,300 then the total amount repayable would be much higher. As has been said the majority of your repaymrnt is going on interest at the start and the settlement figure is unlikely to be incorrect.

    If you can post actual start date, APR and term then we can check.
  • BermoniaBermonia Forumite
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    Hmmm... you thought that you’d only have to repay what you borrowed and not a single penny of interest?!?!

    As stated about you have not accounted for any interest, Birmingham Midshires have made no such mistake I’m afraid.
  • SnowTigerSnowTiger Forumite
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    Presumably linked to this.

    From 2nd April 2016:
    Please can someone help me?

    In January 2008 I took out a mortgage and an unsecured loan with Birmingham Midshires. The unsecured loan and mortgage repayments are combined into one monthly repayment.

    I have now sold my house and the mortgage will be paid off in full. I am unable to settle the unsecured loan and took advice from Birmingham Midshires on what would happen to the unsecured loan. They wrote a letter stating that the unsecured loan would continue to run as per the agreement. However, the interest rate calculated would be based on the Bank of England Base Rate plus 8.00% plus 2.09%.

    I called them yesterday to enquire how much my monthly repayments would be and at first they refused to tell me saying they were not at liberty to advise me. I complained and said that it was ridiculous that the actual lender couldn't tell me how much the monthly repayments would be. As I'd made a complaint the Manager called me today and said that they had made an exception and could release the information.

    Well you can imagine my shock when I was told the monthly repayments would be £478.00 per month.

    I owe £17,700. My loan statement confirms that I have 21 years left remaining. Based on the letter I received from them, I have calculated an interest rate of 10.59% over 252 months = approximately £179.00 per month.

    I asked the Manager to explain how he had arrived at a figure of £478.00 and he refused and said that it was definitely correct. This means that over 21 years I will pay back around £120,000.00 for a £17,700 loan. The interest rate will be approximately 30%.

    I now find myself in a situation where I will have to pull out of my house sale as I cannot afford to pay this back, plus a new mortgage and bills etc.

    Could this be a mistake or are lenders allowed to treat people like this?

    Please help as I am beside myself with worry over this.

    Thank you.
  • MisteeqMisteeq Forumite
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    Part of the Furniture 10 Posts Combo Breaker
    UPDATE
    I have received a response from Birmingham Midshires re my request, and they have confirmed in writing that from the 31 January 2008 - 30 January 2020 inclusive, I have repaid a total of £14,661.61. The breakdown of this is:
    £8,572.44 in interest
    £6,089.17 in capital
    My early settlement figure is 15,334.02.
    As I wish to settle the loan early, I am confused as to how the settlement figure is so high?
    I had a loan with Halifax around 5 years ago for £15,000.00 (taken out over a 7 year period). The repayments were around £221.00 per month which I repaid for around 3 years. My early settlement figure from Halifax was around £7,300.00 so I am confused as to why Birmingham Midshires is charging so much?
    Please can someone help me understand this?
    Thank you.


  • dresdendavedresdendave Forumite
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    You borrowed £21,300. So far you have paid £6089.17 off of the capital sum, the rest of your repayments were interest.
    Therefore the outstanding capital sum is £21300 less £6089.17 = £15210.83. 
    There is presumably a little bit added on for early settlement so  the figure seems correct.
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