Mortgage interest decimal place question

carrie78

I queried with my mortgage company my annual statement.

We are on an interest only mortgage so you would expect the opening and closing balance on the statement to be the same. I called to query why our closing balance had increased by about 76p. I got the following reply

"The increase of £0.76 on the closing balance of your mortgage account was due to the way the system calculated your monthly payment. As we only take two decimal places when quoted your monthly payment, there would be unavoidable discrepancies between the interest charged and the interest payment received for the year."

They refunded it as a goodwill gesture.

Is this the case for everyone does this get added to your mortgage every year?

I know I'm talking about really small amounts of money but if they do this every year then you are paying more interest upon interest on your under paid interest etc.

Thanks
Carrie

CLAPTON

why not make an additional payment each year of £ 0.76 to avoid the compound interest effect?

carrie78

We will be changing in a couple of months to a repayment.
I just wondered if this was the case for everyone?

Thanks
Carrie