Overcharged for a coronavirus mortgage break ?

Spadger42

Hello all firstly let me say bare with me on this, it is correct and could knock thousands off your mortgage. I took a mortgage holiday last year of 3 months because I was furloughed. Santander actually added the following to my balance x3 full missed payments equating to £3000 to my balance, it went up £3000, they also increased my payment by I think it was £15 a month to cover the missed payments. Now you may be thinking so what is wrong with that, now my mortgage is made up of two parts, capital repayment and interest, I understand they would have missed the 3 months interest from me and rightly should have added that to the balance but the capital still remained within the mortgage debt  and was rightly being charged interest so they should not have added another capital payment on top of the balance as it was already within the loan. For example my balance was 100k and I pay £1000 a month of which £250 is interest £750 capital, my balance after the 3 months should have been 100,750 or maybe a little more with compounded interest on the prior £250s not 103,000 as those capital repayments missed are still within and already owed in the balance that was 100k and being charged interest.
I write this as it seems most banks seem to have gotten away with this fraud and as I would suggest profiteering in a pandemic. You do have to think about it to get your head round it admittedly, but once you have the idea correct in your head you'll see they've pulled off a scam. I've written and complained to Santander and await the outcome but I will take this further with the ombudsman. I hope this helps a few people as they should not get away with profiteering.

diggingdude

I think you are wrong but I'm sure someone knowledgeable in these things will be along soon to comment 

Jeremy535897

If your balance was £100,000, and you had kept up your mortgage payments, your balance would now be £100,000 less (3x£750) = £97,750. Taking the holiday should mean it remained at £100,000 plus unpaid interest of (3x£250) plus extra interest say £45 = £100,795.

elsien

It was a misnomer calling it a Covid holiday because obviously interest etc. sill accrues. 

Did you read Santander t&c when deciding whether to take the delayed payment option and do they fit with what has now happened? 

https://www.santander.co.uk/personal/support/loans-and-mortgages/coronavirus-faq

Spadger42

Yes Jeremy it took me a while to get my head round but right from the start I thought it was wrong, They cannot add on capital payments that are already within the balance, I have no issues with the interest missed they have just thrown the whole thing on my balance when I already have the capital within the balance. Diggindude I don't think I am wrong matey but it is a complicated thing, one that possibly has affected everyone who's taken a coronavirus mortgage holiday ? now that would be profiteering.

Jeremy535897

What was the precise balance on your mortgage before you took the payment holiday, and the day it ceased?

Spadger42

sorry if I'm typing this in the wrong pace Jeremy, my balance was about £164k and went upto £167k bar a few pounds, it equated to the £971 mortgage payment in full.

Billy_B_North

Spadger42 said:

Yes Jeremy it took me a while to get my head round but right from the start I thought it was wrong, They cannot add on capital payments that are already within the balance, I have no issues with the interest missed they have just thrown the whole thing on my balance when I already have the capital within the balance. Diggindude I don't think I am wrong matey but it is a complicated thing, one that possibly has affected everyone who's taken a coronavirus mortgage holiday ? now that would be profiteering.

It’s far more likely that you’ve miscalculated than a large fraud is being perpetrated by the banks.
It’s possible that they have made a mistake, but still unlikely. Why don’t you give the actual numbers, the balance before, term, payments, number missed, and the balance afterwards?

Spadger42

I just did Billy, within roughly £40, I'd have to order statements as Santander only go back a year from what I can find, essentially I went from 161k to 164k and even if you assume one payment that was due was added to the balance that still leaves over 2k. I think they've made a mistake if I'm honest, I doubt it would be across the board because someone would have picked it up.

Spadger42

Hi Elsien, well I thought I had but looking at that I clearly haven't, that's scandalous, so they in reality have made not just the interest payment of say £250 but within one month have made over £700 for taking a payment break ! so it has cost me an extra £2100 to have three months off for money I already own them, this must go to the ombudsman.

MH1927

The amount of interest on a mortgage isn't charged at a flat rate across its length?

At the start you pay more interest as the amount of capital outstanding is higher, as you get to the end the amount of interest incurred decreases as there is less capital outstanding