Outrageous Lendor Behaviour

bobmij

Hi Everyone,

I'm furious at the policy of my mortgage lender and their usurious behaviour and wonder if it shoulds be reported to the ombudsman.

My fixed rate of 2.6% finished today and the new SVR rate of the lender will apply while my new rate is sorted out.

But not to worry, I have a large amount of savings that I was going to use today to pay the mortgage way down.

I called up the company to check that I could make the payment and, yes, no problem, I can pay in any amount now that the fixed rate term is finished.

However, the operator told me that even though my balance is reduced, they will still charge me at the new rate of 8.5% for the entirety of the mortgage even though I've reduced it by 80% meaning that my payment goes from £800 to £2600 when it should have been going down to approx £500. This is for the first month only.

Apparantly this is because the mortgage payment calculation is done on the first of the month for payments occuring at the end.

Paying it before today wasn't an option because it would have attracted an early repayment charge of £6k

And so they have effectly strongarmed me out of £2k despite my best efforts and planning to avoid it. 

It just feels as if they are commiting daylight robbery and so I have made an official complaint which I intend to take all the way to the ombudsman if they don't give me a satisfactory outcome.

Does anyone else have any experience of something like this?

J.

dunstonh

I'm furious at the policy of my mortgage lender and their usurious behaviour and wonder if it shoulds be reported to the ombudsman.

The ombudsman is not a regulator.  So, "reporting" them won't achieve what you think it will.

However, the operator told me that even though my balance is reduced, they will still charge me at the new rate of 8.5% for the entirety of the mortgage even though I've reduced it by 80% meaning that my payment goes from £800 to £2600 when it should have been going down to approx £500. This is for the first month only.

That is normal as direct debits are submitted around 10-15 days in advance.  So, if you make a reduction after it has been submitted, the monthly payment cannot be changed.

I'm assuming that is the issue rather than anything else as the vast majority of lenders calculate interest daily.  You dont name the lender.

And so they have effectly strongarmed me out of £2k despite my best efforts and planning to avoid it. 

Not really.  You could have paid a lesser amount in.  i.e. £2k less.   

housebuyer143

Most lenders calculate interest daily, so it will work itself out, maybe not in time for your first payment but anything you pay over the calculated interest will come off the capital instead. 

MWT

bobmij said:

However, the operator told me that even though my balance is reduced, they will still charge me at the new rate of 8.5% for the entirety of the mortgage even though I've reduced it by 80% meaning that my payment goes from £800 to £2600 when it should have been going down to approx £500. This is for the first month only.

You may be confusing the calculation of your next monthly payment with what is happening to the balance on your account...

You may have missed the deadline to have the reduced balance considered when calculating your next payment, but as interest is charged daily what you will see is a larger than usual reduction in the remaining balance on your account once the actual interest for the month is applied to the account.

You have in effect just paid down more of the mortgage than you intended, you will not be charged interest on the original balance for the whole month.

 

RelievedSheff

This is perfectly normal and far from "outrageous" behaviour from your lender.

You should perhaps put your efforts into reading your mortgage terms and conditions rather than contacting the ombudsman!

london21

Will still work out eventually.

They need like 2 weeks to calculate. My fix rate ends 01/02/2024 and they said I have to finalise by 18/01/2024 not to go on standard variable. 

ElwoodBlues

Just reduce your lump sum payment by 2k and let them take that on the next regular payment. It'll be about £14 in extra interest, that's all.