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Mortgage monthly payment increase - within term - why?

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Good morning, Nationwide has increased my monthly payment in March from February by £5.39. I am within term - my current mortgage term finishes on 31st August. I have made maximum overpayment. When I asked N/wide, the person said ‘sometimes payments are adjusted in the final stages of a mortgage term’. I told them I have a fixed rate mortgage for a reason - teacher/fixed budget and why now is the monthly payment increased and they said I got a letter on 4th March. No letter, and currently awaiting another.
is this usual to have a monthly payment increase? It’s not happened previously. Thanks in advance for advice.

Comments

  • amnblog
    amnblog Posts: 12,728 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    29 days in February, 31 in March.

    When calculating amortisation (the speed of paying off a debt), lenders have to account for differing days each month. In a leap year an extra day's interest can cause a complication, perhaps a £5.39 complication in your case.
    I am a Mortgage Broker

    You should note that this site doesn't check my status as a Mortgage Broker, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • Thanks very much for your comment /advice. Do appreciate it. I hadn’t thought of the leap year. I was wondering if it would revert back to normal for April, after a normal month, so we shall see. Cheerio, thanks again.
  • moneysaver
    moneysaver Posts: 836 Forumite
    Part of the Furniture 500 Posts Name Dropper
    amnblog said:
    29 days in February, 31 in March.

    When calculating amortisation (the speed of paying off a debt), lenders have to account for differing days each month. In a leap year an extra day's interest can cause a complication, perhaps a £5.39 complication in your case.

    And Nationwide did not explain this. Poor customer service from Nationwide.

    Moneysaver
  • BikingBud
    BikingBud Posts: 2,530 Forumite
    Part of the Furniture 1,000 Posts Photogenic Name Dropper
    amnblog said:
    29 days in February, 31 in March.

    When calculating amortisation (the speed of paying off a debt), lenders have to account for differing days each month. In a leap year an extra day's interest can cause a complication, perhaps a £5.39 complication in your case.
    I don't get that. If it's fixed payment it's fixed payment.

    If you have overpaid, within allowance, that will reduce the capital. 

    Whilst the interest is calculated daily and for a repayment mortgage it will be different for all months, as the number of days are different and as the capital reduces the accrued interest reduces and the ratio of capital to interest shifts from interest to capital. Compounding works both ways!

    All absolutely normal but if systems cannot cope with leap years and different days in the month then we really are doomed.

    Logically however, the payments should remain the same, until the final payment when that should cover (a) the final agree payment from a fixed payment plan or (b) the final payment to clear the debt.
  • Thank you Amnblog and BikingBud for your posts/ thoughts. As the N/wide person said sth about readjustments being made towards the end of a term, the leap year May make sense perhaps though the increase if £5+ is quite a lot for a month - though I am not a Maths’ teacher…. So numbers are not my forté… I don’t remember any increase 5 years ago or within the term ever yet perhaps I wasn’t looking. I’m due to get a letter to replace the one apparently sent on 4th March - no letter rec’d - so perhaps it’ll be explained then. Still a little flummoxed as I also thought a fixed rate ensured a fixed amount for monthly payments full stop, the whole point being able to budget accordingly each month. Ah well… we shall see. Thanks again. All the best 
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