Overcharged for a coronavirus mortgage break ?

getmore4less

Spadger42 said:

getmore4less said:

This probably should have been in the mortgage section.



Taking what the OP is questioning and going straight to the Santander link

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


working through the pull downs

 Will I still be charged interest on my mortgage during my payment holiday? 
Yes, if you take a mortgage payment holiday, we’ll add your monthly payments to your mortgage balance. This means that your mortgage balance will increase and the amount of interest you pay will increase for the remaining term of your mortgage. Your monthly payment then increases to reflect this after the payment holiday has ended.

That is clearly wrong only the interest should be added to the mortgage if there is a payment break and the term reduced by the relevant amount which will put the payment up from its original.

 How will a 3-month payment holiday affect my future mortgage payments? 
our monthly payments will increase due to the additional interest payable as a result of your monthly payments being added to your mortgage balance.
Here are some examples of how a 3-month payment holiday would impact the monthly payment on a repayment mortgage.

Remaining term	Mortgage balance	Interest rate	Monthly increase
25 years	£100,000	4.34%	£9.05
20 years	£100,000	4.34%	£11.82
15 years	£100,000	4.34%	£17.45
10 years	£100,000	4.34%	£32.51
5 years	£100,000	4.34%	£108.73

I have some existing spreadsheets so will use them

Taking the first example £100k 25 years   4.34%

rate	fees	payment	add fees	interest only
4.34%	£0.00	£546.79	£546.79	£361.67

Lets do it properly adding the interest for 3 months compounding and then paying over 24 years 9 months

£100000+£361.67+£362.97+£364.29 = £101,088.93

rate	fees	payment	add fees	interest only
4.34%	£0.00	£555.84	£555.84	£365.60

an increase of £9.05 that matches the table provided by Santander

pretty clear to me they are just supposed to be adding the interest and that is what they intended.



lets look at what people are saying is correct  you add the payment onto the balance.........


adding 3 payments gets £101,640.37 over 24y 9m

rate	fees	payment	add fees	interest only
4.34%	£0.00	£558.87	£558.87	£367.60

that makes the increase £12.08  so something is wrong they don't seem to be doing that in the examples. 


IF the  OP says they have added the full normal payment then they need to discuss this with Santander and get it corrected

but have they


if OP posts their actual mortgage data for before and after the payment holiday

amount, rate, payment, remaining term(to the month) 

I can do the calculations.


reading the posts they say 

£161k mortgage? also says 164 somewhere 
£971  payment

£2910. increase 

they also say the payment went up by £15


need the rate and the full term to do the numbers 



if I do an example for more realistic £161k 16 years 2%  nor far from the op payment of £971

rate	fees	payment	add fees	interest only
2.00%	£0.00	£980.54	£980.54	268.33

adding the interest gets 

£161000+£268.33+£268.78+£269.29=£161806.40  over 15 years 9 months

rate	fees	payment	add fees	interest only
2.00%	£0.00	£998.73	£998.73	269.68

an increase of £18.19 not far off the £15 the OP says they had

Adding 3 full payments would give £163941.62

rate	fees	payment	add fees	interest only
2.00%	£0.00	£1,011.91	£1,011.91	273.24

An increase of £31,37  way more than they say the payment went up.

which suggest that Santander may have actually done the right thing but the communication on the balance may have gone wrong



hope the OP can provide their real numbers to get to the bottom of this.

Hi mate the payment went up £15 however it did coincide when interest rates went down, within the same month from memory, thanks fist of all for understanding my question, you’ve hit it on the nail. I’m not saying I’m right or wrong or saying it’s an easy thing to understand, however fundamentally you should only have interest missed payments added to your balance and an increase monthly to cover them. Capital added that’s already within the balance is wrong. I can’t get hold of my accounts as I’d have to order them, santander have a cut off on online banking and unfortunately I can only go back as far as last may, saying that I’ve not tried on the pc , I’ll give that a try. I’m not in here to solve my problem per say, I’m doing that through a complaint letter to Santander which is being investigated. I thought it was an anomaly and many others may have fallen so called victim, so highlighting it may help others, only to get smart **** remarks and all kinds of stupid questions. A little click maybe, I’ll go look to see if I can get the March onwards from the pc. 

You are going to need the detailed monthly numbers to get to the bottom of this How can you check any result without that information? Seems pretty clear to me from the examples that they mean only add interest even if the wording says other wise.

getmore4less

Spadger42 said:

Should have added with the interest rate going down the increase was about £15 without it would have been about £30 or somewhere about. 

What rate are you on now and can you remember the rates around the change was it a deals change or just rate

What is the full term?

Spadger42

I’m just checking now, it was 1.91 went down to 1.71 ? I’ll get all the figures and trust me if I’m wrong I’m wrong and will accept it. That’s not for you that’s for the ones telling me so. 

Spadger42

can’t get statements can’t get statements but I’ve ordered them, annoying. Interest rate went down from 1.91 to 1.79. I’ll post on the board when I get a reply from Santander, I’m just speculating until I get my statements. 

getmore4less

Thanks, I had been working with a 2% guess on £161k over around 16years.

for the 2 rates that would be 

rate	fees	payment	add fees	interest only
1.91%	£0.00	£973.85	£973.85	£256.26
1.71%	£0.00	£959.07	£959.07	£229.43

if we add just the interest say £750 and redo over 15y 9m

rate	fees	payment	add fees	interest only
1.91%	£0.00	£991.67	£991.67	£257.45
1.71%	£0.00	£976.84	£976.84	£230.49

that does not fit a £15 change.

if we add the payments(~£2910)

rate	fees	payment	add fees	interest only
1.91%	£0.00	£1,004.91	£1,004.91	£260.89
1.71%	£0.00	£989.88	£989.88	£233.57

that fits a lot closer


Based on the limited information and approximations it does not look right and looks like they may have added the payment..


For 3 payments around  £970  and interest added along with a rate drop of 0.2%, 1.91%, £161k over 16 years you would expect them to near cancel out. (<£5 difference)

Batesy1976

getmore4less said:

Based on the limited information and approximations it does not look right and looks like they may have added the payment..


For 3 payments around  £970  and interest added along with a rate drop of 0.2%, 1.91%, £161k over 16 years you would expect them to near cancel out. (<£5 difference)

Looks exactly right to me.  They said they were going to add the payment.

GrumpyDil

I kept out of this yesterday because everyone was so sure about this even though it made no sense to me either.

Adding the total missed payment would make sense for an interest only mortgage. For a repayment adding the missed interest only would make sense. 

getmore4less

Batesy1976 said:

getmore4less said:

Based on the limited information and approximations it does not look right and looks like they may have added the payment..


For 3 payments around  £970  and interest added along with a rate drop of 0.2%, 1.91%, £161k over 16 years you would expect them to near cancel out. (<£5 difference)

Looks exactly right to me.  They said they were going to add the payment.

That may be what they put on the page linked to but it is the incorrect way to deal with payment holidays on mortgages. The examples shown on the same page(£100k 4.34%) confirm that as they only add the interest to work out the increase for those examples.

Spadger42

Thanks Getmore4less, you,VE been really helpful, still awaiting back from Santander, it’s more than likely an error but I thought it fair to put it out in case anybody else especially with a different company has had the same experience. Thanks 

Batesy1976

getmore4less said:

Batesy1976 said:

getmore4less said:

Based on the limited information and approximations it does not look right and looks like they may have added the payment..


For 3 payments around  £970  and interest added along with a rate drop of 0.2%, 1.91%, £161k over 16 years you would expect them to near cancel out. (<£5 difference)

Looks exactly right to me.  They said they were going to add the payment.

That may be what they put on the page linked to but it is the incorrect way to deal with payment holidays on mortgages. The examples shown on the same page(£100k 4.34%) confirm that as they only add the interest to work out the increase for those examples.

So maybe the examples are wrong then.


Only adding the interest would be wrong anyway.  The term isn't increased so there are also three missed capital payments that need to be made up too.