Does this interest sound right?

purpleparrotuk

I have received my redemption statement for my existing mortgage. The final figure to pay looks correct but the daily interest if the payment is not made in time doesn’t look right. At the moment I pay approx. £8 per day interest, £250 per month. The interest rate is 1.8%. This ends and the end of the month when it will go onto the SVR rate which is around 6.4% at the moment. I have been advised that if there is a delay and I don’t complete on the 03/01/23 then the daily interest will be £30 per day. Surely this isn’t correct because that would make the interest £900 per month!

 

Does this seem wrong?

JGB1955

The new interest rate (6.4%) is 3.56 times that of the current 1.8%.

If your current interest is £250 per month, then £250 x 3.56 = £890, so 'yes' that looks correct.

london21

Do you expect to complete after 03/01/23?

If not why are you concerned. 

purpleparrotuk

JGB1955 said:

The new interest rate (6.4%) is 3.56 times that of the current 1.8%.

If your current interest is £250 per month, then £250 x 3.56 = £890, so 'yes' that looks correct.

So if I had stayed with the current lender at the standard rates I would be paying £650 more per month. Blimey. 

purpleparrotuk

london21 said:

Do you expect to complete after 03/01/23?

If not why are you concerned. 

No I don’t but things can happen and worse case scenario would be an extra £650 per month if it fell through for any reason.