Product switching hack/fee

stud26

You're right something isn't adding up. I knew it was too good to be true. 

Will chat to the lender and find out what's going on. 

Thanks for your help, and at this time of night, really appreciated.

stud26

400ixl said:

£36k over 18 years at 1.18% is £185 per month and £39,976 total to repay
£36k over 18 years at 4.16% is £213 per month and £51,205 total to repay

Pure maths and you can't change it. Look at how much extra you pay back.

So why am I paying £311 instead of the £185 you've calculated? 

So many questions for the lender.

lfc321

stud26 said:

400ixl said:

£36k over 18 years at 1.18% is £185 per month and £39,976 total to repay
£36k over 18 years at 4.16% is £213 per month and £51,205 total to repay

Pure maths and you can't change it. Look at how much extra you pay back.

So why am I paying £311 instead of the £185 you've calculated? 

So many questions for the lender.

You have got some figures wrong somewhere. You need to find out from the lender:

a) the term remaining
b) the current balance
c) whether you are currently making regular overpayments. 

As everyone has said, the lower interest rate will always save you money if you are comparing like with like.

housebuyer143

stud26 said:

You're right something isn't adding up. I knew it was too good to be true. 

Will chat to the lender and find out what's going on. 

Thanks for your help, and at this time of night, really appreciated.

You have paid off probably more of your mortgage by overpayments? Doing so will reduce the term. So ask the lender what term is left, it's not 18 years. That's why your numbers don't work.

In no world is it worth switching to a higher rate. You are not finding some hack, you are just inputting incorrect figures when making your calculation.

stud26

Speaking to the lender, overpayments were made but they didn't trigger a recalculation. Need to talk to a different team on Monday to get it fixed. 

I also confirmed that there are no exit fees or ERC for this product. But that doesn't matter now as the term will be reduced.

I assume term reduction is the better choice over reduced payments. 

Thanks for all your help.

ACG

Put in the current balance, the current term and the current rate - that will give you one repayment. 
Put in the current balance, the current term and the new rate - that will give you the new repayment (this will be higher). 

Its just wasting your time and theirs by calling them up.

BikingBud

ACG said:

Put in the current balance, the current term and the current rate - that will give you one repayment. 
Put in the current balance, the current term and the new rate - that will give you the new repayment (this will be higher). 

Its just wasting your time and theirs by calling them up.

This. 

As it currently stand we cannot see how the loan has dropped from £65k to £36k over 3 years. When it appears the monthly payments would only equate to £11.2k, leaving £53.7k. Where has the further reduction of £17.8k come from?

If that is where you are and you have overpaid then clearly the remaining £36k needs to be covered and the second figure would appear to be correct.

Clearly if you have overpaid then total amount payable does change:



You just need to be clear on everything you have contributed to repaying. 

But perhaps if you can afford a higher amount, be clear on what overpayment allowance is in place (how it will be treated by the lender) or see if you can match a higher payment to achieve a shorter period.