Mortgage company made mistake, now I'm paying back more

stue76

Morning,
Last June my 2 yr fixed repayment came to an end. I then took out a 5yr fixed rate repayment with the same provider. The amount I was paying a month decreased. I received my mortgage summery this week telling me from next month my mortgage was going back up. The new cost is actually higher than when the 2 yr fixed came to an end. Having spoken to the provider, they have admitted they made a mistake last year when recalculating the new 5 yr fixed rate and as such have been undercharging me. The new monthly payment reflect this. They told me that every year my repayments will go down by a few quid. Based on that it will take a number of years for the payments to get back to what they were before I went on the 5 year fixed rate. Their advice was that I could pay the 'outstanding' money ( the shortfall of being undercharged) in one go and this would take me back down to the amount pre 5yr fixed rate. I'm literally paying for their mistake!
Any thought  /advice on this one?
Thanks

getmore4less

Any thought  /advice on this one?

Some numbers would help.

At the switch(June 2020) what was 
Outstanding balance
Outstanding full term(to the month not just years)
Both rates
Both payments

now(March 2021 they have discovered their error
same details(it is important that terms are to the month)

Have they said what the sum is to bring it back in line.
also give every other number they have given you

 I'm literally paying for their mistake!

unless they made a massive error or you are on high rates the actual extra cost to you is not going to be very big. 

eg: looking at £100k over 20 years on a 2% rate where they miscalculate the repayment and have a lower payment going out
payment should be £506 and say they charged £450  the extra interest over a year is £6. 
The missing capital due to the smaller payment is around £700  and paying that will bring it back to near where it should be.

I used an extreme underpayment there to exaggerate the effect  and that would have been very obviously wrong at the start.
because £450* 240=£108k  and £8k interest over 20 years is nearer 0.4% interest only way too low

smaller errors are often due to using the wrong full terms or the timing misses a payment

stue76

Thanks for the reply. I don't have the figures to hand at this time. But I was paying £773 p.m. This then changed to £703 p.m and now has been changed to £796 p.m

getmore4less

Can work with estimates for now amount rates and full term might be enough along with the payments

dunstonh

I'm literally paying for their mistake!

Actually, you are paying what you should have paid had it been done correctly in the first place.

From what you have said, you had a period you paid less than you should.  They are putting it back to the correct amount but letting you decide whether you make up the backpayment in one go or leave it to get back over a longer period.

If you plan to pay the backpayment in one go you could ask them to wipe out the interest on that figure.  Although it sounds like it wont be much.  If you plan not to repay it one go then it sounds like you have benefitted from the lower monthly payment.

So, there really isn't an issue here apart from a short term admin inconvenience.