HELP! woolwich didn't change my monthly payments...

sunny2000

... even though the base rate went down .75% since the start of the mortgage (Jan 08).

Is this normal? Has it happened to any of you? The offer / contract says new base rate will take effect with the 1st of the following month - how annoyed am I!!

I tried to call today but they were closed. Advice pls? x

silvercar

Is it a base rate tracker mortgage or a fixed rate?

If a base rate tracker: Some of their mortgages are set up that the repayments stay the same, in the event of a base rate fall, the difference between the interest rate you should be paying and the mortgage payment you are making is treated as a capital repayment. If you don't like this arrangement you can phone and change it.

If a fixed rate mortgage: The repayments shouldn't change.

~Beanie~

Why are you annoyed, you will be paying more than necessary if your payments should have gone down so this is of benefit to you in the long run.

KentishLady

If your mortgage is on a repayment basis then the Woolwich will not recalculate your monthly repayments each time there is an interest rate change. The monthly repayments are instead recalculate once per annum after the annual mortgage review (when the annual statement is issued) on 30th September.

If you have an interest only mortgage then your payments should have changed if the interest rate has changed. This will only be the case if you are on a base rate tracker product/variable rate product - fixed rates will stay the same.

bluestar-ale_2

Hi

KentishLady is correct the Woolwich only review the monthly payments on an annual basis (30th Sept), as already stated you will have been over paying and hence paying more of you mortgage off by the Woolwich not changing your monthly payments.

You have to phone and request they change you payments if you want your payments to reduce, I did this a week of so ago, so will see the benefit of the full 0.75% cut on next month's payment.
Chris

cookdn

We have noticed the same thing and are currently challenging Woolwich. As far as I can see this is a sharp practice that they apply unilaterally across all variable rate repayment mortgages.

Where there is a net fall in interest rates between annual recalculations, you win as you are overpaying on your mortgage payments and your capital amount reduces more quickly. However if there is a net rise in interest rates you lose.

Your monthly payment, which is no longer large enough to cover both your capital repayment and the ongoing interest in full, is applied to the interest first; the remainder being applied as a reduced capital repayment. The net result is that you are underpaying your mortgage capital.

At the annual recalculation the capital part of your monthly payment goes up due to the net underpayment over the previous 12 months. The interest part of your payment goes up twice:

1. to reflect the higher interest rate
2. to cover the extra borrowing on your underpaid capital

We have an repayment tracker mortgage so the following may not apply to everybody.

Firstly the overpaying of the capital on a net fall in interest rates is a benefit granted to us in the contract, Woolwich are not doing us any special favours there.

Secondly the wording of the legal offer makes two statements in relation to a variation in interest rate:

1. new interest rates are applied to the account at the first of the month following an interest change
2. monthly payments are recalculated and applied at the next available payment date (typically sixteenth of the month for customer giving Woolwich the benefit of Direct Debit)

Barclays-Woolwich refuse to honour this but have yet to provide me with a part of the contract that modifies or contradicts this wording. They do say that you can contact them for a manual recalculation, but you have to keep an eye on the interest rate and make the move.

My position is that they are in legal breach of contract until they can satisfactorily show otherwise.

mr_mortgage

I worked on this with the Woolwich a few years ago (around the time of mortgage reg) ... basically, the net difference between the old repayment and what you expected it to drop to is paid against the capital borrowing you took, so you are reducing the amount you borrow. They are not stealing your money, you are simply paying off your mortgage faster and the term will reduce slightly.

If you do want the overpayments back, this is not usually a problem and you can take a further advance secured against your property equal to the amount you overpaid. This will put your mortgage account back to where you expected it but the benefit you gave yourself by making these overpayments (whether you realised you were doing it, or not) will also be reversed.

Mr M.

getmore4less

It was fairly clear in my barclays/woolwich docs that the payment is calcuclated annualy and interest is calculated daily and this will over/under pay if the rates change.

Don't have them to hand but could dig them out if required.

cookdn

mr_mortgage wrote: »

the net difference between the old repayment and what you expected it to drop to is paid against the capital borrowing you took, so you are reducing the amount you borrow. .

Understood already. This is a benefit already granted as part of the contract.

mr_mortgage wrote: »

They are not stealing your money, you are simply paying off your mortgage faster and the term will reduce slightly.

No they are not stealing money, however they are rigging the system so that when there is a net rise in the variable rate over 12 months they claw back extra interest due to the underpayment on the capital.

getmore4less wrote: »

It was fairly clear in my barclays/woolwich docs that the payment is calcuclated annualy and interest is calculated daily and this will over/under pay if the rates change.

Don't have them to hand but could dig them out if required.

Thanks, but the wording of the legal offer that was accepted by both us and Woolwich is very clearly worded as described in the previous post. Woolwich are trying to argue that a Deed of Variation booklet (for a new mortgage?) altered this wording legally in the context of our contract. We have no copy of such a document (and we have everything).

Mutton_Geoff

Woolwich only review the monthly payments on an annual basis (30th Sept)

I redeemed all but £1k of my mortgage in February, keeping a small amount outstanding to retain the offset mortgage overdraft facility. Woolwich converted me to offset, interest only, and with more than the outstanding amount in my current account, there should have been no interest to pay.

For every month since, Woolwich have sent me overdue amount letters based on my old repayment amount, they claim the monthly payment isn't reviewed til Sept so the "overdue" letters were justified. Every month they have charged me £5 interest on the amount outstanding despite there being sufficient money in the offset accounts. Each time I call them I get a different story. Their complaints team next to useless and the Barclays Premier managers ineffective at sorting the problem out.

I'm reluctant to chuck away a handy, no set up cost, credit line but Woolwich/Barclays are a complete joke with no personal input, simply "computer says yes/no".

cookdn

Mutton_Geoff wrote: »

Each time I call them I get a different story. Their complaints team next to useless and the Barclays Premier managers ineffective at sorting the problem out.

I've found the attitude of the staff quite contemptuous. The call centre are clearly incentivised to prevent queries and complaints escalating to the Complaints Team (aka Customer Relations), and will do everything including lie on recorded telephone calls to achieve this.

After three weeks I resorted to contacting the local Barclays branch manager and mortgage advisor who logged the complaint for me.