Is my bank overcharging slightly on every mortgage payment?

LukeHayward

dunstonh said:

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?

I believe the calculator ( http://www.lanthos21.com/easy_mortgage/ ) is treating these things correctly.  Even so, they seem minor - could they result in a payment that is ~ £1.50 in HSBC's favour?

LukeHayward

Deleted_User said:

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

No

No

No

Not sure

But these things seem minor in the scheme of things. Could they account for a ~£1.50 in HSBC's favour?

GeordieGeorge

LukeHayward said:

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.

Come on. If you’re that paranoid pick a completely random number between 0.1 and 10, multiply every figure by that, and give those.

It’s ridiculous to ask if the figures are wrong then not supply them, how can anyone conceivably help? This is like calling an ambulance then telling them that you’re not comfortable telling them where you are.

grumiofoundation

LukeHayward said:

Deleted_User said:

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

No

No

No

Not sure

But these things seem minor in the scheme of things. Could they account for a ~£1.50 in HSBC's favour?

Yes they are minor factors. 
But unless your mortgage is very small so is £1.50 per month...
So yes they could (and almost certainly do) account for the difference.

If you want someone to check if HSBC's calculations are correct then you will need to provide the figures.

If you don't feel comfortable providing the figures then obviously no one can check them. 

[Deleted User]

Lots of minor errors can compound to a big error

LukeHayward

grumiofoundation said:

LukeHayward said:

Deleted_User said:

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

No

No

No

Not sure

But these things seem minor in the scheme of things. Could they account for a ~£1.50 in HSBC's favour?

Yes they are minor factors. 
But unless your mortgage is very small so is £1.50 per month...
So yes they could (and almost certainly do) account for the difference.

If you want someone to check if HSBC's calculations are correct then you will need to provide the figures.

If you don't feel comfortable providing the figures then obviously no one can check them. 

Many thanks.

I don't believe that £1.50 is small (in the context of *every month* over the life of the mortgage) and can be explained by the factors you mention.

But yes I'm not so much interested in having someone verify the figures - more interested in seeing if others have seen similar issues.

LukeHayward

Deleted_User said:

Lots of minor errors can compound to a big error

Yes i agree. However the mortgage calculator i used ( http://www.lanthos21.com/easy_mortgage/ ) seems to work to the penny for the cases I checked in excel.

LukeHayward

GeordieGeorge said:

LukeHayward said:

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.

Come on. If you’re that paranoid pick a completely random number between 0.1 and 10, multiply every figure by that, and give those.

It’s ridiculous to ask if the figures are wrong then not supply them, how can anyone conceivably help? This is like calling an ambulance then telling them that you’re not comfortable telling them where you are.

I'm not asking if my figures are wrong (I believe they are) - I'm asking if others have experienced the same.

getmore4less

LukeHayward said:

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.

Can't reverse engineer the most likely reason without the numbers.

You can ignore a lot of what has been suggested as much of that never gets used when calculating the payment which tends to stay fixed till a trigger recalculates it.

 AIUI most(all?) use standard amortization to calculate the payment as that is close enough but track real interest and payments for the actual mortgage.

Thrugelmir

LukeHayward said:

GeordieGeorge said:

LukeHayward said:

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.

Come on. If you’re that paranoid pick a completely random number between 0.1 and 10, multiply every figure by that, and give those.

It’s ridiculous to ask if the figures are wrong then not supply them, how can anyone conceivably help? This is like calling an ambulance then telling them that you’re not comfortable telling them where you are.

I'm not asking if my figures are wrong (I believe they are) - I'm asking if others have experienced the same.

As I suggested in my earlier post. Crunch the numbers properly. Calculations require facts not belief.