Beware Mickey Mouse Mortgages from Lloyds Bank

Analyst

Anyone trying to overpay a mortgage from Lloyds Bank should check every mortgage payment from day one carefully.

We have had a roller coaster ride, including our mortgage term unilaterally  increasing by 5 years, within a 3 month period, that resulted in 13 years of mortgage under payments. This is not noticeable unless you carry out a detailed calculation of you mortgage payments from day one, which is what I recommend.

Now we are in the up phase of the roller coaster, being asked to make exponentially increasing mortgage payments, that reduce our offset mortgage by an additional 2.5 years within a very short space of time.

Our ongoing complaint with the FOS has lasted nearly 10 months, and counting. None of this roller coaster behaviour is in the contract.

Just to be clear, we are being forced to pay 2.5 times the correct monthly mortgage payment, which is 100% of my pre tax income from all sources.

I am posting for information only.

DE_612183

sorry - I think you need to explain that better.

what type of product are you on?

what changes have you made / LBG made?

Analyst

DE_612183 said:

sorry - I think you need to explain that better.

what type of product are you on?

what changes have you made / LBG made?

Offset repayment mortgage with a fixed track to BOE base rate.
Zero changes in whole 20 years to date.

We contracted on day one to reduce our mortgage term using offset interest only. Lloyds did the opposite and for a period the mortgage balance was higher than if we had no offset at all.

In short, continuing mortgage payments as if there was no offset gives the correct answer, and is a simple and standard calculation. Lloyds do not do this, so it is likely they make the same error on any mortgage where there are overpayments.

I believe the error is made up of 3 elements.

1. Lloyds are attempting to calculate the reduced term, while forgetting that the term reduces automatically, due to the offset. The result is an overall trend that double counts the term reduction.

2. Bizarrely, that overall trend is overlaid with a wild fluctuation in over and under estimates of the remaining term. For a long period, the remaining term was longer than it would have been if there had been no offset. At other times, the term reduction is much larger than it should be.

3. There are the usual minor differences that generally form the majority of complaints. We are nowhere close to getting to these.

DE_612183

Have you actually lost any money?

Hoenir

Terms contractually don't reduce automatically. Having had an offset mortgage myself. I'm confused from what you've you've posted as to what the problem is.  Other than there is a lack of miscomprehension as to how the product works.  Which is why you've posted on here after 10 months of debating the issue elsewhere. 

Analyst

Yes, but it is more than money. Much more.

Analyst

Hoenir said:

Terms contractually don't reduce automatically. Having had an offset mortgage myself. I'm confused from what you've you've posted as to what the problem is.  Other than there is a lack of miscomprehension as to how the product works.  Which is why you've posted on here after 10 months of debating the issue elsewhere. 

We will win. It is just a matter of time. For your information, Lloyds bank have confirmed repeatedly in writing that the mortgage works in the way we believe. I only post here to help others.

Hoenir

Well your post makes little sense to me. 

Analyst

Hoenir said:

Well your post makes little sense to me. 

You would not be saying that if you were involuntarily paying two and half times the correct mortgage payment.

Analyst

Analyst said:

Hoenir said:

Terms contractually don't reduce automatically. Having had an offset mortgage myself. I'm confused from what you've you've posted as to what the problem is.  Other than there is a lack of miscomprehension as to how the product works.  Which is why you've posted on here after 10 months of debating the issue elsewhere. 

We will win. It is just a matter of time. For your information, Lloyds bank have confirmed repeatedly in writing that the mortgage works in the way we believe. I only post here to help others.

To answer your comment fully

The term reduction is mathematical. It requires a contract to do something different.

If I were after a debate (which I am not) it would be to determine Lloyds' argument, as they have not made one in 10 months. The final letter supports our case, and is part of our evidence.

Perhaps you should check your offset mortgage, as you may not understand it.

Analyst

Me to Lloyds - 2+2=4

Lloyds to me - 2+2=5
Lloyds to me - no its not 2+2 =3
Lloyds to me - no, 2+2=5

12 months later (now)

FOS to me - 2+2=5, and it is supported by this new evidence from Lloyds that 2+2=3

I will explain fully when the Ombudsman has made their decision, but the maths really is that simple.