Post Office Loan Early Redemption, Redemption amount increased through lockdown

accountantpost

Hi guys
I am really hoping you can help.

I took out a loan with post office for £25,000 for some home improvements back in May 19 (at interest rate of 11.9% over 7 years, went through MSE credit club and it was indicated it would be 3.2% and when i put the application through it went upto 11.9%, and as it had already hit my credit score I had to accept).

I am currently looking to consolidate the loan into my mortgage (through remortgage to save on interest and to spread the cost etc), I asked for a redemption figure back in Feb/March and they had quoted £23,685, which appears to be correct based on my calculation (balance plus early repayment charge of £3%), then the whole covid situation happened and I had taken a payment deferral for three months (as work had discussed putting people into furlough etc), I called them back up in June to arrange my repayments and asked them again for a redemption figure and it had gone upto £24,387.

Now payment deferrals when it comes to loans should not add any further interest to the loan so the redemption figure should remain the same. It appears that they have added interest to the balance (the increase matches my interest calculations). The claim that they have not and that as the redemption figure is provided three months later "there is less interest to be saved". The total interest is added at the beginning of the loan but as far as i am aware interest is calculated on the balance.as normal loans.

Have i made a mistake of my understanding, or can they infact charge me additional interest (under the guise of me saving less interest). I have also checked the interest and balances etc through MSE early repayment calculator and it matches my spreadsheet (give or take £10-£20).

Any and all information/advice is appreciated.

Thank you in advance

Thrugelmir

Interest is not charged upfront. It is charged monthly in arrears on a daily basis. A payment holiday will increase the amount you owe. For the simple fact that the interest accrued hasn't been paid. 
When you originally took out the loan repayments are set to repay the debt over the selected term, the interest rate being fixed. 

[Deleted User]

As above - you've accrued more interest on a balance that was high than it would have been.

[Deleted User]

Can't understand why anyone would borrow £25k at 11.97%apr, why not remortgage in the first place if you have to?
<shakes head>