Birmingham Midshires increased payment due to new system

nrsql

I have a couple of fixed rate interest only mortgages (4 years left) with Birmingham Midshires. They have moved these to a new system to integrate with Lloyds.
The interest is now calculated at the start of each month rather than at the payment date (I think - something like that).
It means that my payment has been increased by about £1 a month - they say this is not due to the change in the system.
OK - I assume the total amount of interest I pay will be the same but I just pay an extra (lend them) £1 a month which I get back in 4 years time.
On a call it took a lot of effort to get them to understand that and that they would be benefitting by £1 a month - money they have which I don't compared to the original contract.
They said this wouldn't have been allowed if it was to my detriment!
It seems this will help their cash flow and they will also benefit by inflation.
It was annoying that they thought it was ok to increase the payment as long as the total amount didn't change but especially that they said the change wasn't due to the change in the system but because I had missed interest payment (due to the way it is now calculated). This appears as an extra amount in a sub account on my mortgage statement.
I've raised a complaint so we'll see what happens.

dimbo61

Well I have read this and so have 16 other people.
So your lender has changed the date they calculate your interest and you now have to pay an extra £1 each month ??
If the Interest rate is the same and the amount owing is still the same you will find at the End of the term it makes No difference what so ever.
You will pay exactly the same amount of Interest.
Interest Only mortgages ! 
So are you talking about BTL mortgages and Rental properties ?

nrsql

Yes - I will (presumably) pay the same at the end of the term but in the meantime I am lending them £1 each month which I get back at the end of the term.
By the same reasoning they could say I pay the full amount now and not pay anything more until the end - I am still paying the same interest so there is no difference.
OK it's only £50 or so which doesn't make much difference to me - but it is a small mortgage but if they are doing the same to there mortgage book it can mean they are taking a lot of extra money.
Yes BTL.

amnblog

You are clearly a fan of detail so here it is straight from BM Solutions mortgage conditions.

What we charge interest on

We charge interest on everything you owe (until you have paid it off) unless we tell you we are not charging interest on something. We charge interest for every day you owe us anything under the agreement.

We start charging interest:

• on any money we lend you from the day we lend it to you;

• on interest from the day after we add it to your mortgage loan; and

• on any charge and cost we add to your mortgage loan from the day we do so.

Interest is charged each month on everything you owe, including any arrears and any interest on arrears you haven’t paid. This

can include interest on the interest we have already charged you but you have not paid.

If you make a payment, it will reduce

what you owe (and the amount we charge interest on) from the day we actually receive the money.

How we work out interest

For each month, we look at what you owe at the start of the month, and then at anything that we add to what you owe (such as a charge) or that you pay off (say through a monthly payment) during the month. We then calculate your interest for the month

as follows:

• (what you owe at start of month) x (yearly interest rate) x (days in the month)

Plus

• (any added amount) x (yearly interest rate) x (remaining days in month, including day of addition)

Minus

• (any payment) x (yearly interest rate) x (remaining days in month, including day of your payment)

We then divide that total figure by 365 (366 in a leap year). We calculate to four decimal places at each step and then round up the result to the nearest penny to give your interest charge for the month.

getmore4less

That should work out the same as daily interest

Key information would be when the interest is added and when the payment is made.

Even interest only the balance can change depending on timings as weekend/BH move payments and month sizes are different so interest will be different to the payment if fixed payment is use.


£1 is a very precise amount.

Mortgage payments are normally to the £0.01.

amnblog

getmore4less said:

£1 is a very precise amount.

Mortgage payments are normally to the £0.01.

We calculate to four decimal places at each step and then round up the result to the nearest penny to give your interest charge for the month.

getmore4less

amnblog said:

getmore4less said:

£1 is a very precise amount.

Mortgage payments are normally to the £0.01.

We calculate to four decimal places at each step and then round up the result to the nearest penny to give your interest charge for the month.

I did read that but the OP says about a £1.

Need more information to have any chance of working why there may be a difference.

Amount rate and payment date would be a start.

nrsql

There is a difference because they've moved to a new system. Previously they calculated interest monthly and took payment later. Now the interest is calculated up to the payment date.
They say it's not due to the system change but because I've missed an interest payment - which is obviously not true.
They could probably have changed the payment date - but that would probably anger more people.

If they had sent out a letter asking if we were happy for them to make this change and stated it was because of their system change it wouldn't be a problem but the way it has been carried out is not good.
They still say that the total amount I pay will be the same but don't seem to acknowledge that when this is paid is important. Would be a bit concerned if they think they can get away with a similar change for larger amounts.

gauge_boson

I am so pleased that I came across this thread! Last year, I decided to plough my life savings into paying off my BTL fixed-rate repayment mortgage.

To avoid the early repayment charge, rather than pay it off last year, BM changed my term to coincide with the date at which a full redemption could be made without a charge being made; that happens to be 31st December 2021 so, including this month, I had just three payments to make. After the final December payment, it was just the final mortgage fee to pay (about £250).

When BM changed my term/repayments in September last year, a very large monthly repayment resulted (thousands), and I had been paying that precise amount by direct debit right up to and including the September payment. However, yesterday a letter arrived in the post (a similar one to the one you received no doubt) where BM said, having implemented their new system, my monthly repayments would increase by £703. I checked my bank statement and, sure enough, on 22nd October they had taken the new amount.

By the time I have paid my final payment in December, I will have paid £2,100 more than I should have done! The only thing in that massive sum that is new to my monthly repayments is the £250 final mortgage fee, but a third of £250 is certainly not £2,100!

I called BM, which is now handled by a helpdesk in the Philippines, which was not the case last September. I was told that they had no access to the 'old system' so they could only answer questions on my account starting from September this year. I asked where the extra £703 per month had come from; they could not answer that question and they would have to contact their 'back office' and write back to me in 7-10 days to explain.

In desperation, I called the 'difficulty with paying my mortgage' number, which was answered by a helpdesk in the Midlands. The person was very kind (as it was not her job to look into account issues) and made enquiries internally through her manager; at the same time she raised a complaint on my behalf and said that she would call me back. Sure enough, she rang me back an hour or so later, but she had been unable to find anything out; I would have to wait for an explanatory letter.

What a terrible situation! What should I do?