HSBC charding Debit Interest in addition to mortgage payments

Sigena

Hi all,

Hoping for some advice please! This is our 3rd mortgage now so not a first time rodeo so to speak. Previously we mortgaged with Platform for 5 years. As rates have gone through roof, we ended up re-mortgaging with HSBC this year and our second payment has gone out today. Payments seem to be accurate as per mortgage agreement, with 5.09% fixed rate. However, at the same time as my first payment and second payment these two past months, and when I looked on online banking mortgage account, there is another charge of 'Debit Interest' with quite a lot of money (about 80% of mortgage payment credit amount). Can anyone clarify, what is this payment as I called HSBC and they insisted this is normal charge and variable to capital amount (have no clue about this and my sense is if this is confusing then I am being robbed).

 However, looking at the money total, our mortgage does not seem to had gone down much. Also, on call support stated that amount in 'Debit Interest' should go down each month, however, I do not agree and understand it should be at all. What I know from my limited knowledge is that interest is already calculated in actual monthly payments, that contribute to the actual borrowed amount. With this Debit Interest charge we would not pay off mortage in 100 years!

Please help if anyone understands, I have requested to send paperwork with calculations to me and plan to talk with mortgage advisor if this continues and I find resolution, maybe I just stress with no reason?

Thanks, Sig

kingstreet

On what date did your remortgage complete?

Is it interest to the end of the month of completion?

housebuyer143

Are they taking two payments a month from you? Do the two amounts add up to what you were expecting? 

Rodders53

Sound to me that:

You owe £NNN,000 on a 5% pa mortgage rate over xx years.  Your repayments are £zzz per month.

Lets say its £100k and that's around £5k pa interest (£416.67 per month).  You pay £600 per month (for example) - it could be less, or more.

-----------------------

Balance day0 £100,000 DR

Balance day 30 (1 mth in) = 100,000 plus Interest Debit (5%/12) £417DR (rounded) = £100,417 DR less monthly repayment amount £600CR = £99,817 DR still owed.

Next month £ 99,817 interest is £416 (rounded) and repayment is £600 so you now owe £99,613.

and so on each month.

Very little is paid off the capital in the first years and slowly more and more is capital and less and less interest on the balance.

Normal.

cymruchris

Rodders53 said:

Sound to me that:

You owe £NNN,000 on a 5% pa mortgage rate over xx years.  Your repayments are £zzz per month.

Lets say its £100k and that's around £5k pa interest (£416.67 per month).  You pay £600 per month (for example) - it could be less, or more.

-----------------------

Balance day0 £100,000 DR

Balance day 30 (1 mth in) = 100,000 plus Interest Debit (5%/12) £417DR (rounded) = £100,417 DR less monthly repayment amount £600CR = £99,817 DR still owed.

Next month £ 99,817 interest is £416 (rounded) and repayment is £600 so you now owe £99,613.

and so on each month.

Very little is paid off the capital in the first years and slowly more and more is capital and less and less interest on the balance.

Normal.

Yes sounds like this.

Each month your balance reduces by the amount you pay (your mortgage payment), and then it goes back up by the interest charged on the remaining balance, so your overall balance in the early years hardly seems to move as you are paying so much interest. You probably didn't see the breakdown on your previous mortgages. You're not being charged untowardly or twice or anything like that.

nyermen

I pay a fixed amount to my HSBC mortgage account each month.  I can also see that account transactions.  The outstanding on the mortgage account is always the "remaining loan amount to be paid off".

On my HSBC mortgage account, they deduct debit interest each month, calculated based on my current rate and the outstanding principal.  The net of these two (monthly payment minus debit interest) is the amount I'm actually paying off each month of the mortgage.  Any overpayments I make would be all deducted from that actual amount paid off as well of course.

Depending on rates, term, etc, indeed the debit interest could be large.