Extended Mortgage term and Buildings Insurance Premiums.

[Still Waving]

Hi

You have some incorrect figures there, which are throwing your calculations out.

Last payment due in '92 was 88.20.
MIRAS in '92 was 358.18.

[Guest]

Thanks for that i've corrected them now , think i was going boggle eyed . Have you spotted the problem yet ? Its a massive problem for me.......

[Guest]

Sorry i'm not good at explaining stuff. I have redone the sheets in a better explanatory fashion i hope. As you look at the columns you will see "payments made" column which is actually the events of the account and you will see "payments due " column which you can largely ignore as i put it there for a comparison to see how the account should go. The beginning and end of year balances are now marked and i think it shows you things more clearly the way i have laid it out. You will see in 1991, instead of repaying any capital at all the account is infact -£25.35 and in 1992 the capital repayment is only £6.79 :

[Guest]

The problem with the above is that the £127.07 payment on 31st December is stuck in the ether and not accounted for on either 1991 sheet or 1992 sheet.
I'll demonstrate, here is how the account would of looked had the 127.07 got there before the interest posting:



You can see that if it had made it on time there would of been £101.72 paid off the capital. But that didn't happen.

[Guest]

So it never made the 1991 calculation. It also never made the 1992 calculation either, if it had of done here's how it would look :



You can see it would of paid off £133.86 of the capital instead of £6.79.

[Guest]

Another anomally. 1992 my spreadsheet and the microfiche. My actual payments total £1081.30 . Payments due shows £1190.87 was due. So i paid short by £109.57 ? The microfiche shows a nominal credit balance ?

[Still Waving]

This is all getting very confusing.

I'm currently looking again at my figures for '91, before looking at what did, or should have happened in '92. Let me just say now that I think you have made a fundamental error which needs to be corrected. I believe the usual tenet is that interest and all other debits are paid before any payments are allocated to capital. So the insurance has to be paid before capital. You have not allowed for this. The insurance doesn't affect the arrears, but it does have to be cleared.

For '92, my original calcs came to a payments deficit of £143.28 (ie your 109.57 plus 33.71 ins).

There are two figures to be established for each year - the payments deficit, and the capital reduction deficit. Then I think the arrears/credit balance situation looked at afterwards.

I'll come back again at another time, after I've looked at things. In the meantime, can you let me know what the interest rate was at 31/12/91?

[Guest]

Interest rate for 31/12/91 was 11.55% . it was 11.55% from 01/10.91 until 28/02/92.

[Guest]

Let me just say now that I think you have made a fundamental error which needs to be corrected. I believe the usual tenet is that interest and all other debits are paid before any payments are allocated to capital. So the insurance has to be paid before capital. You have not allowed for this.

No, i've done exactly what you have just said. Post #201 as example:
https://all-about-debt.co.uk/forum/m...06#post1543606

[Guest]

This is all getting very confusing.

I'll tell you why it is confusing. Its because all their systems and calcs are wrong. And its the reason why we are getting so exasperated.
Perfect example: the initial repayment calc................ £13375.69. @12.75% = £118.69.
Thats incorrect. Its the correct figure if you use the correct percentage which was 13.5%. But they wrong footed us with a letter saying i never increased my payment, so we looked at that. I came to a conclusion that it was quoted at a 20 year term, you came to a conclusion that it was a MIRAS error. The actual calc was correct, the completion docs and follow up letter saying 12.75% was incorrect. That was where we all went wrong. Right calculation, wrong interest percentage quoted.

BTW, many thanks for your help with this.

[Still Waving]

Originally posted by Still Waving View Post

Let me just say now that I think you have made a fundamental error which needs to be corrected. I believe the usual tenet is that interest and all other debits are paid before any payments are allocated to capital. So the insurance has to be paid before capital. You have not allowed for this.

No, i've done exactly what you have just said. Post #201 as example:
https://all-about-debt.co.uk/forum/m...06#post1543606

With respect, no you haven't. Do you not see that insurance is a payment due, so should be listed up with the other payments due. You have included it in your calc of the carried forward balance, but have not appreciated that you need to net it off against the capital reduction figure, as it was not paid and therefore reduces any capital reduction. You will see this if you put the insurance where it belongs, with the payments due. Also for '92 you have wrongly incorporated in one place a b/f figure of 13401.87. Explanation below.

For what it's worth - and taking the actual situation rather than what you think it is - my calcs indicate the following:

1991
1) Taking debits due including insurance = 1415.10. Less Payments (not including 31/12) 1258.93 = payments deficit 156.17 . Now, net interest + Insurance = 1336.21, Less payments 1258.93 = Capital Reduction Deficit (ie capital Increase) of 77.28. This is also borne out separately by the balance outstanding going up from 13324.59 (y/e '90) to 13401.87, before the 31/12 payment.

2) Taking debits due including insurance = 1415.10. Less Payments ( including 31/12) 1386.00 = still a payments deficit 29.10. Now, net interest + Insurance = 1336.21, Less payments 1386.00= Capital Reduction 49.79. This is also borne out separately by the balance outstanding going down from 13324.59 (y/e) to 13274.80 (y/e).

Note, too, that the 127.07 has been accounted for as it reduced your outstanding balance and, despite there still being a 29.10 payments deficit, there is a capital reduction of 49.79.

1992
Taking debits due including insurance = 1224.58. Less payments 1081.30 = payments deficit 143.28. Net interest plus insurance = 1108.22, less payments 1081.30 = 26.92 Cap Reduction deficit (ie capital Increase) . This is also borne out separately by the y/e balance going up from 13274.80 to 13301.72.

Comment:
In '92 there were only 10 repayments made including one of just £1.30, resulting in a repayment deficit of 143.28. Also at 31/12/91 there was a repayment deficit of 29.10. It goes without saying that these deficits have hindered the capital reduction by similar amounts.

As noted earlier in the thread, it appears that the balance at end of '90 was £13324.59. This small reduction after almost 2 years does suggest that there were repyment deficits somewhere in those two years. Difficult to square that with the apparent credit arrears brought forward without those statements.

You may disagree with my analysis of '91 and '92, and indeed the whole thing has become so muddied that I may be mistaken. I wouldn't want to give you a wrong steer, so I am going to bow out now, and leave it to your auditor. I hope he can sort it through for you.

Good luck.

[Guest]

Many thanks for the help. I can now bring this thread to a conclusion as i have worked it out. Its very simple really as computers can't lie and don't make mistakes.

1991:


The amount needed to keep the account in order if you look at the credit arrears column was £22.64.



Now if i add £22.64 to the total i'd paid it equals £22.64+£1258.93 = £1281.57 . So its still short of what is needed. Its actually £1363.17-£1281.57=£81.60 .
Where did the £81.60 go ?



£209.35 - £127.75 = £81.60.

What is happening is that any overpayments stay in the credit/arrears balance column and do not get creditied to the account. Once you know that you can just rinse and repeat as you go through the next year or two and its 100% accurate. Their system is not set up to credit an overpayment.

It also confirms that the £127.07 was not accounted for. All my other calculations are 100% correct.

I'm done, i'm just going to crack on with what i have to do now, cheers again. Oh, BTW i won't be the only one this happened to................. its a system failing.

[Still Waving]

A figure in the arrears/credit column is not actually a balance per se. It is just an expression of the relative positions of payments due and payments received. If it is showing an overpayment, the payment has already been credited to the account.

[Guest]

If it is showing an overpayment, the payment has already been credited to the account.

100% correct. But its not been allocated to the interest/capital schedule correctly. In the case of the £127.07 its been directly allocated to the capital .But oddly shows as an overpayment . It can only be one or the other.

[Guest]

Well recieved contact from the Ombudsman this morning. Looks like the business has been on to them already, they are not agreeing to the complaint being looked at until they have consent from all necessary parties. They've picked up on the fact the joint account holder is now my ex wife. They want a signature, birth date etc.. They're in for a shock if they think thats gonna cause me any difficulties. They'll have that first thing tomorrow morning if not sooner. Always pays to be nice to your ex partner and maintain good relations !!! :-)