Extended Mortgage term and Buildings Insurance Premiums.

[Still Waving]

Still Waving you are correct. I've realised, the bottom bit should really be placed at the top then it makes sense. The last column is "current arrears" . But this has blew my mind, they appear to show a positive rather than a negative ? Also i can't understand what i am seeing, you might understand it. Near the bottom of the arrears column you will see a figure 81.79, then underneath you will see 22.64- (twice) . 81.79 + 22.64 = 104.43 . This figure is the same figure as the payment on 4th December and also its the same figure at the end of the arrears column. Gets more crazy... 81.79+22.64+22.64= 127.07 the same as the 31st December payment. Can you figure it out ?

Not sure if I've already answered this question re the '91 statement, as this thread is rather sprawling. In case I haven't, here goes -

In the arrears column a positive figure is a deficit and a - figure is a credit amount. The unchanging 22.64 figure is because the entries corresponding to those are the posting of interest and the Miras allowance. Your payment of 127.07 on 31/12 turned the deficit of 22.64 into a credit of 104.43 which as we said earlier was carried forward to '92.

I haven't yet tried to figure out why the arrears figure stayed the same for a number of months earlier in the year.

[Still Waving]

I've been looking through the '93 and '94 statements. '94 is the first one which is fully and properly set out (apart from your queries over the coding). It seems that during '93 in particular there was regular communication with the Society about what payments were needed. '94 is pretty much self-explanatory, so I'll concentrate on '93.

You may already be aware that they were taking any monthly overpayments and crediting them to a sundries account, where the insurance was debited. Some smaller amounts and two more significant ones on 4 Oct and 8 Nov. On 4 Oct I think £129.68 was paid, with £79.68 being the monthly instalment and £50 paid to Sundries. I think £150 was paid on 8 Nov, with £102.09 going against the monthly debit and £47.91 going to Sundries, which cleared the balance of insurance.

I looked at the arrears situation during '93, and for much of the year it was clear, then going into credit in Nov and Dec ending at 15.05 credit. This was brought forward into '94 and your first monthly overpayment in Jan increased it to 18.95 credit, as can be seen on the statement. Unfortunately the overpayments transferred to Sundries in '94 were mostly very small leaving an insurance balance of 100.49, which was debited to the main account in Dec. Consequently your account balance only reduced by 41.37.

[Roger]

The problem really is at the start your repayments are mostly interest with small capitol repayments. BUT if they keep putting you back to the start again then the term simply extends doesn't it! Its playing SNAKES and LADDERS . You keep finding yourself back at the Begining and it seems were never formally told!!!

I'm gonna recap here (not verbatim but almost), .. it was widely reported in the press around 2007 that the Ombudsman had ruled that AN had failed to notify its customers that their term may be increased if they did not keep up to date with rate changes. I'm uncertain how that relates to me as i did know that if your closing balance was greater your term could be extended. Also i don't ever recall getting rate change letters (there is only one in my SAR bundle, and it doesn't actually have the rate on it), but in any case i can firmly establish i went in and asked what i had to pay. The press reports go further..........The Ombudsman found that AN routinely extended mortgage terms in response to interest changes around the 1988-1993 period. On its own that makes absolutley no sense to me. The Ombudsman publishes all its findings/cases/rulings etc.. but only as far back as 2012. But of course as a public body they do hold the information, i've already requested it. 20th December i should have hold of it.

In the meantime i will wait for the ruling, wait for the interest rates and i'm going to take a punt at a further mortgage rate enquiry armed with new info. Be back when i have some news, Cheers

[Still Waving]

You can also test out my theory by forgetting MIRAS, just go with the % and the quoted rate and look at the Monthly Capital & Interest Payment Breakdown, i believe it will show i am correct ?

If you're happy that you've got it correct, I'm not going to argue about it, since I don't KNOW how they calculated your repayment and whether they were using 12.75 or 13.5. When I worked for a building society about 100 years ago they had comprehensive tables showing repayments at many different rates of interest over various terms, from which they extrapolated the figures for each specific mortgage advance.

Clearly one of us is approaching the calculation from the wrong direction. .

Like i said earlier, your brain works very different from mine. And if it wasn't for you i wouldn't have got this far. Cheers.

Clearly one of us is approaching the calculation from the wrong direction. So, I've taken your method and applied it to 13.5%. Full payment 155.91. Interest 150.48. 25% off = 112.86. Add principal element 5.43 = 118.29.

So - either they were correctly charging you at the new interest rate, or they were incorrectly charging you at the old rate, or they were correctly charging you at the old rate but someone thought in March/April that 118.69 was correct at the new rate. The waters get muddier.

You can also test out my theory by forgetting MIRAS, just go with the % and the quoted rate and look at the Monthly Capital & Interest Payment Breakdown, i believe it will show i am correct ?

Clearly one of us is approaching the calculation from the wrong direction. So, I've taken your method and applied it to 13.5%. Full payment 155.91. Interest 150.48. 25% off = 112.86. Add principal element 5.43 = 118.29.

So - either they were correctly charging you at the new interest rate, or they were incorrectly charging you at the old rate, or they were correctly charging you at the old rate but someone thought in March/April that 118.69 was correct at the new rate. The waters get muddier.

You've got it. Thats spot on. If you use the same calculation on the 1988 quote, you'll see they are out again even with that. That also makes sense why no one has told me how the calculation was worked out (i.e they know its wrong). It makes sense as to why i have no interest figures, other than what i have been able to asses from their various letters and quotes. If i am correct then i'd say thats pretty massive ?

[Still Waving]

MIRAS was a straightforward 25% rebate of your interest payment. You can see this on any of the statements 91/92/93 . And it was applied at source, i.e when you paid. £13375.69 @25 years @12.75% gives me a monthly full payment of £148.34. Interest only would be £142.12 . 25% off £142.12 gives us £106.59 . Thats why endowment mortgages where popular remember ? Now add £106.59 to the difference between full payment and interest only (£6.22)........................ 106.59+6.22 = £112.81 . That should be the correct payment for £13375.69 @ 12.75% (i.e the full payment with a 25% reduction of the interest portion)
Hopefully if i'm right ? !!!

Clearly one of us is approaching the calculation from the wrong direction. So, I've taken your method and applied it to 13.5%. Full payment 155.91. Interest 150.48. 25% off = 112.86. Add principal element 5.43 = 118.29.

So - either they were correctly charging you at the new interest rate, or they were incorrectly charging you at the old rate, or they were correctly charging you at the old rate but someone thought in March/April that 118.69 was correct at the new rate. The waters get muddier.

MIRAS did change to 20% but that was 1st April 1994 .

I would agree that we here could use some clarity regarding insurance. If it is/was property cover, it would be expected that the premiums rise over time to reflect increased re-building costs. If mortgage protection it should be reducing over time as the risk decreases. The premiums were higher in '93 and '94 than in '89.

It was straightforward "bricks and Mortar" insurance. You'll note they say the premium of £80.30 in the 1989 letter. By 1993 it had gone up to £134.51 . The odd figures from 89/90/91/92 tell me that i must of paid part when i went into the branch to pay. And like they said in their initial correspondance, if it was not paid after so many days in full they would deduct it, and thats what they have done. Do you think there may be some credence that them premiums could lead to such a term extension ?

So many points to answer, and so many comments to make about other items I've been looking at. I don't have time just now, so I'll answer just a couple.

I see what you are saying now about the initial repayment calculation, but I don't agree with your figures. Taking the original loan amount using 9.57% (rounded up) as the 12.75% MIRAS-deducted rate, I get 117.51, which is pretty close to what they quote. The online calculators are useful tools, but are not what the Societies use, so there will be a slight variation. According to the calculator, that repayment would reduce the capital balance by approx £11 per month.

However, your point is that the repayment they quoted you is at the old rate (which is what they said a few years later), but someone in March '89 seemed to think it was the correct debit for Feb and March. Unfortunately, due to the 'lost' statements you cannot prove what did or did not happen subsequently in that year and the following.

At 13.5% (discounted to 10.13%) I make the repayments to be £122.77 (est). So if they HAD corrected the rate during '89 (possibly at the end and backdating) this could have led to a £60-£70 deficit (rather than an approx £120 balance reduction) if you had, as they allege, continued paying at 118.69.

Also, with the rate quoted in that '88 letter I make the MIRAS discounted (8.63%) repayment to be £108.88 , not quite so close to theirs this time, but still in the ballpark. You didn't say what you made it, but I don't think we need concern ourselves on this particular one.

MIRAS was a straightforward 25% rebate of your interest payment. You can see this on any of the statements 91/92/93 . And it was applied at source, i.e when you paid. £13375.69 @25 years @12.75% gives me a monthly full payment of £148.34. Interest only would be £142.12 . 25% off £142.12 gives us £106.59 . Thats why endowment mortgages where popular remember ? Now add £106.59 to the difference between full payment and interest only (£6.22)........................ 106.59+6.22 = £112.81 . That should be the correct payment for £13375.69 @ 12.75% (i.e the full payment with a 25% reduction of the interest portion)
Hopefully if i'm right ? !!!

Thanks Roger. There is a bigger picture here rather than my account specifically. While i have been concentrating on the various single activities on the account looking for this or that then i'd missed the bigger picture. I now know that it was not down to me alone, even with the way my account was, it would not of itself been sufficient to add ten years to a term. Thats the first alarm bell. The second alarm bell is that they said nothing about it and it did not show on any early statements. Thats the second alarm bell. The Insurance premiums, although its true they have caused a debit, they are no where near enough to add tens years to an account. The Insurance Premiums are a complete Red Herring.
Their own quotations give the game away as regards what they have done by miscalculating the interest rates from the outset. Its telling that the 89/90 statements have been disposed of. If that really is their Data retention policy, then why have i been provided with letters from 1988 ? There is another alarm bell. The 91/92 statements are chopped, no interest rates on them. Another alarm bell.
I'm not savvy enough yet to work out in practice what it means for them, but i can deduce that when they have quoted me £118.69 @ 12.75%, then that figure is really what the payment is at 13.5%. I can't actually work out if this mistake caused them a loss or a profit. But what i do know is that it would of cost an absolute fortune to put the error right and i'll guarantee i'm not the only one. But for me, its shows that what i have been told is incorrect.

[Still Waving]

I would agree that we here could use some clarity regarding insurance. If it is/was property cover, it would be expected that the premiums rise over time to reflect increased re-building costs. If mortgage protection it should be reducing over time as the risk decreases. The premiums were higher in '93 and '94 than in '89.

[Still Waving]

So many points to answer, and so many comments to make about other items I've been looking at. I don't have time just now, so I'll answer just a couple.

I see what you are saying now about the initial repayment calculation, but I don't agree with your figures. Taking the original loan amount using 9.57% (rounded up) as the 12.75% MIRAS-deducted rate, I get 117.51, which is pretty close to what they quote. The online calculators are useful tools, but are not what the Societies use, so there will be a slight variation. According to the calculator, that repayment would reduce the capital balance by approx £11 per month.

However, your point is that the repayment they quoted you is at the old rate (which is what they said a few years later), but someone in March '89 seemed to think it was the correct debit for Feb and March. Unfortunately, due to the 'lost' statements you cannot prove what did or did not happen subsequently in that year and the following.

At 13.5% (discounted to 10.13%) I make the repayments to be £122.77 (est). So if they HAD corrected the rate during '89 (possibly at the end and backdating) this could have led to a £60-£70 deficit (rather than an approx £120 balance reduction) if you had, as they allege, continued paying at 118.69.

Also, with the rate quoted in that '88 letter I make the MIRAS discounted (8.63%) repayment to be £108.88 , not quite so close to theirs this time, but still in the ballpark. You didn't say what you made it, but I don't think we need concern ourselves on this particular one.