Extended Mortgage term and Buildings Insurance Premiums.

[Still Waving]

I'm going to ring them in the morning and ask what my payment is, i think its £71.74, i just pay £100. I'll ask them my interest rate, start date and start balance and try it that way. I'm just confusing myself now. 33 years of this, you'd think i'd have the hang of it by now !!

I would suggest not quoting any figures (yours) to them in case they are incorrect. What would be useful to have is a list of all the interest rates charged from inception and the dates from which they applied (or at least upto 1994). Edit: and the new repayments.

I've been doing some further work to try to flesh out the picture, but it's based on certain assumptions and guesses, which while they may help in some ways, could on the other hand be misleading.

[Guest]

I've looked at that letter from '88, and it looks to me that they have deducted MIRAS at 20%, which is clearly wrong. An individual can make an error. I do think, though, that the 118.69 is correct at 13.5%.

[Guest]

I would suggest not quoting any figures (yours) to them in case they are incorrect. What would be useful to have is a list of all the interest rates charged from inception and the dates from which they applied (or at least upto 1994). Edit: and the new repayments.

I've been doing some further work to try to flesh out the picture, but it's based on certain assumptions and guesses, which while they may help in some ways, could on the other hand be misleading.

I have already asked the subject access team for the rates pre 1994, so i'll wait to hear from them. I've just come off the phone, just asked some simple question of where i am now:
Monthly Repayment = £71.74
% Rate = 4.99
Start Date = 23rd January 1989
Start Balance =£13301.72

Do i have an Insurance Premium i have paid this year or has one been deducted= No
Am i paying any other sundry account = No.

Using their figures above (418 Month term) i get a payment of £67.17.
If i adjust that term to (370 Months) i get a payment of £70.50.

[Guest]

If i run £13,301.72 at 370 months @ 4.24% i get £64.49 ?
The next year, 2010 they get a different rate again @4.24%

[Guest]

I've been revisiting the crucial question of the repayment calculation at the outset of the mortgage. I accept that ML,s method is probably the more accurate. So I agree that at 12.75% the repayment would have been approx £112.81.

At 13.5% it would have been approx £118.29.

You know what gets me even closer to £118.69 ?

£13,375.69 @ 12.75% = £118.80 over 20 years.

[Guest]

Let me explain why i think its very important. Their initial calc:
£13,375.69, @ 25 years @12.75% they get to £118.69 , i get the calc to £112.81 so if i'm correct they are overcharging by £5.88. Some £70 over the year. If they had to refund that over the course of the years 1989 to 1992 it would get very complicated for them, hence the transfer to a new system and extend everyones mortgage and not tell them. No one would know.

Here is an initial offer from 1988, it never completed at the time. But you can use their figures again and see the same mistake:

And if i run that calc through at a 20 year term its bang on.

[Still Waving]

If i run £13,301.72 at 370 months @ 4.24% i get £64.49 ?
The next year, 2010 they get a different rate again @4.24%

I haven't been looking at these later years, but I've just run those 2010 figures (£9971 - 4.24% - 13 yrs - closest I can get to 12y 11m) and it comes out at £83.25, which is not far off their £83.62.

I'm not clear why you are using £13301 ?

Incidentally, it's odd that they say on the 2010 statement that interest charged from 1/8/09 to 31/12/10 was 4.24%, when in the 2009 one they interest charged from 31/3/09 to 31/7/09 was 4.24%.

You might find these links interesting

https://www.yopa.co.uk/homeowners-hu...gage-interest/

(Scroll down to Different Interest Calculation Methods)


https://www.coventrybuildingsociety....alculated.html

In the early years (at least) AN calculated the interest on 31/12 and added it, so it was already included in the Brought Forward on 1/1.

[Guest]

I haven't been looking at these later years, but I've just run those 2010 figures (£9971 - 4.24% - 13 yrs - closest I can get to 12y 11m) and it comes out at £83.25, which is not far off their £83.62.

Your calculation is incorrect. You can pick any capital amount, and term you like and pick an interest rate you like. The payment will remain the same until the term is finished. If the rate changes then the payment will change up or down. What will not happen is that the capital balance lowering reduces the payment. It will reduce the interest portion but not the actual payment.

For example, my current mortgage balance is approx £1400. it finishes in November 2023. I know the interest rate is 4.99%. And i know my payment is £71.74.

[Guest]

Weird:

This is why i'm using £13,301.72. The correct repayment should be £68.46 . Again its £20 (roughly adrift). There is two possible explanations for this.
[1] Its an incorrect calculation.
[2] Its a Insurance payment top up that has not been disclosed.

As a matter of fact there is not one single insurance related document in my bundle. And for an extra laugh, when i ran this morning to get my info, the guy said "we may be able to switch you to a better rate" . I said no thanks.

[Guest]

This is not even a thread anymore, its a forensic financial investigation !!

[Still Waving]

. What will not happen is that the capital balance lowering reduces the payment. It will reduce the interest portion but not the actual payment.

Of course not! The proportions of principal and interest change with the reductions in the balance of loan. The amount of principal repaid increases each year.

Assume a rate fixed for the entire period of the loan. If they reduced the repayment every year just because the balance had reduced, you would pay off less principal than you otherwise would have, and the term would just go on and on.

[Guest]

Of course not! The proportions of principal and interest change with the reductions in the balance of loan. The amount of principal repaid increases each year.

Assume a rate fixed for the entire period of the loan. If they reduced the repayment every year just because the balance had reduced, you would pay off less principal than you otherwise would have, and the term would just go on and on.

How do you arrive at £83.25 ?

[Guest]

Of course not! The proportions of principal and interest change with the reductions in the balance of loan. The amount of principal repaid increases each year.

Assume a rate fixed for the entire period of the loan. If they reduced the repayment every year just because the balance had reduced, you would pay off less principal than you otherwise would have, and the term would just go on and on.

This is incorrect:

[Still Waving]

As I said in post #158 putting their figures from the 2010 statement into the online mortgage calculator.

You're not still deducting MIRAS are you?

[Guest]

As I said in post #158 putting their figures from the 2010 statement into the online mortgage calculator.

You're not still deducting MIRAS are you?

No, you can see in the screen grab. The screen grab, shows that is an incorrect calculation so i'm not sure how you arrived at that figure. So here is what you can do (that sounds impolite, i don't mean it that way at all. ):

The 2010 statement shows account first movement 1/1/1993. And it shows a a term of 370 months. Now there is confusion around the actual start or restart and the term. As a point of fact the term is 418 months from Jan 1989 with a balance of £13,375.69 or 1st Jan 1993 with a balance of £13,301.72. Choose either to have a look at, but one of them, despite all the paperwork i have and the phone calls its not clear which one they are using.

Now the 2010 statement shows an interest rate of 4.24% . Work it anyway using either start date or balance or even mix them up its not even close to £82.35.