Is my bank overcharging slightly on every mortgage payment?

LukeHayward

Hello
I ran my mortgage details through a mortgage calculator app as a check and the app indicated that each payment should be about £1.50 less per month than I am paying.  I know it's not much per month but it really bugs me that my bank (HSBC 2 year fixed saver mortgage) could be over-charging through rounding or some other means.
Do banks employ different ways of applying the interest rates they charge?  Have others seen this phenomenom?  I'm hoping to find out a little more from the community here before I approach HSBC.
The app i used was Easy Mortgage Calculator ( http://www.lanthos21.com/easy_mortgage/ ). It seems to be accurate to the penny as I was able to reproduce some simple cases in a spreadsheet, so i have no reason to doubt the app for the more complex cases.
Thanks Luke

getmore4less

What are the details of your mortgage, 

Amount, rate and full term(exact to month) when you took it out.
Did you add any fees 
what numbers have you put into the calculators
have you made any overpayments

the standard mortgage amortization calculators  get close to what a lender would get(most the same) but they use months of all the same length which is not what happens in reality as the moths are of differnt length any payment dates vary due to BH and weekend

Whatever is used to calculate the payment does not matter it is the payment that get used with the daily interest to reduce the balance, that will be right.

LukeHayward

I think i've done it ok - HSBC fees were £999 but i entered it to EM Calculator as £1k.  This shoudn't be the diff.

Are you saying that even if i overpay, it's not because the bank has got its interest payments wrong??

GeordieGeorge

LukeHayward said:

I think i've done it ok - HSBC fees were £999 but i entered it to EM Calculator as £1k.  This shoudn't be the diff.

Are you saying that even if i overpay, it's not because the bank has got its interest payments wrong??

As above, if you provide the numbers then people will be happy to check for you. If you don’t no-one will have a scooby if it’s right or wrong.

Thrugelmir

 You need to replicate transactions on the account as they appear on the mortgage statement on a spreadsheet.  Online calculators cannot compensate for real dates. Such as a direct debit falling on the 4th of May rather than the first. As it's both a weekend and a bank holiday. As a consequence there'll more interest charged for 3 days borrowing. 

dunstonh

I ran my mortgage details through a mortgage calculator app as a check and the app indicated that each payment should be about £1.50 less per month than I am paying.  I know it's not much per month but it really bugs me that my bank (HSBC 2 year fixed saver mortgage) could be over-charging through rounding or some other means.

Does it bug you that the calculator probably isn't using the same method of calculation as the bank and is almost certainly giving you the wrong answer?

I think i've done it ok - HSBC fees were £999 but i entered it to EM Calculator as £1k.  This shoudn't be the diff.

Have you use dhte right rate on the sub account for the fees?   Often the main borrowing is on the terms of the deal agreed but the sub account will be at the default SVR.

Is the calculator assuming 31 days each month or 30 days each month?

Is it assuming the payment is applied when the direct debit amount is received or deducted from your account?

Is it assuming monthly in advance or arrears?

user1977

Or to put it another way, if there were a fundamental problem with how HSBC is calculating their mortgage repayments, you're immensely unlikely to be the first person to have spotted it.

getmore4less

LukeHayward said:

I think i've done it ok - HSBC fees were £999 but i entered it to EM Calculator as £1k.  This shoudn't be the diff.

Are you saying that even if i overpay, it's not because the bank has got its interest payments wrong??

provide the information asked for.

LukeHayward

getmore4less said:

LukeHayward said:

I think i've done it ok - HSBC fees were £999 but i entered it to EM Calculator as £1k.  This shoudn't be the diff.

Are you saying that even if i overpay, it's not because the bank has got its interest payments wrong??

provide the information asked for.

Sorry I'm not comfortable sharing all of the precise figures from my mortgage on an open forum. I'm just trying to get a sense for if others have seen this phenomenon too.

LukeHayward

Thrugelmir said:

 You need to replicate transactions on the account as they appear on the mortgage statement on a spreadsheet.  Online calculators cannot compensate for real dates. Such as a direct debit falling on the 4th of May rather than the first. As it's both a weekend and a bank holiday. As a consequence there'll more interest charged for 3 days borrowing. 

Would this account for a ~ £1.50 monthly payment difference in HSBC's favour?

[Deleted User]

Did/does your calculator:

• ask for date the monthly payment is due
• differentiate on  method of adding interest
• ask for dates of bank holidays
• does it account for weekends? 

I have seen this 'phenomenon' countless times when i worked in the bank.   Usually it was someone who forgot about a leap year,  or forgot that different parts of their debt was at different rates, or had rounding errors that were then used for different calculations