Paragon Personal Finance second charge interest

duffed

H I'm looking for advice i I have a second charge mortgage with Paragon personal finance which I still had 4.5 years left on. A few months ago I got a letter saying that they were not charging me interest on my account from now on. I phoned them up and asked if this was correct and why they had decided to do this. they replied "due to a business decision they had decided I had paid enough interest and would no longer be charged interest on my balance" I then asked if I have paid enough interest already does this mean you have been charging me to much in the past? They said no I had paid the correct amount. I was thinking this was a bit fishy but hey its still good news over all as I was expecting my monthly payments to lower a lot now. I was paying £427 a month and over 100 of that was interest.
However my payments have not gone down over the past 6 months I'm still being charged £427 I can see the balance has fallen a lot, I phoned them up as I don't really wanna over pay an interest free loan when I can use it to pay off something else but the refused to lower the payment can they do this? I'm looking for some advise about if they can force me to make overpayments in this way and if I should push the issue of have I overpaid my interest in the past?

silvercar

Sounds very strange. It may be that the T&Cs state the payment will be the same.

post on this thread and maybe a mortgage broker will comment : https://forums.moneysavingexpert.com/discussion/6190962/mortgage-broker-ask-me-anything#latest

BarelySentientAI

I think it's very unlikely that you have overpaid interest in the past.  Is there anything that actually makes you think that other than "they're going to charge me less now"?

Hoenir

duffed said:

I phoned them up as I don't really wanna over pay an interest free loan when I can use it to pay off something else but the refused to lower the payment can they do this? 

As they've made a business decision not to charge you any further interest. It's reasonable for you to maintain the payments at the contracted level to repay the debt. For you to receive additonal benefit at their expense doesn't make commercial sense. Simply costs yet more money. Be pleased with the unexpected bonus you've received. 

duffed

My monthly payments have always changed in the past with interest rate changes. It has always been monthly payment minus interest payment taken away from total balance. Eg £427monthly payment - 100 intrest amount £327 paid off balance. I don’t really want to over pay as I could use the extra money to pay off something that has interest like my original mortgage.

duffed

Hoenir said:

duffed said:

I phoned them up as I don't really wanna over pay an interest free loan when I can use it to pay off something else but the refused to lower the payment can they do this? 

As they've made a business decision not to charge you any further interest. It's reasonable for you to maintain the payments at the contracted level to repay the debt. For you to receive additonal benefit at their expense doesn't make commercial sense. Simply costs yet more money. Be pleased with the unexpected bonus you've received. 

My contracted payments have always been monthly payment-interest payment with difference between the 2 taken off the outstanding balance. So if I pay 100 pounds interest on a total monthly payment of say £400 only 300 comes off the balance. Without interest my payments should become 300 to take me to the term of the loan 25 years