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First Payment on a fixed term mortgage was interest only

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  • 03-11-2009 12:07pm
    #1
    GigaByte
    Closed Accounts Posts: 515 ✭✭✭


    I'm in the middle of switching mortgage from KBC Homeloans to Bank of Ireland. I have just come out of a 3 year fixed mortgage. When I looked at the balance of my mortgage it indicated that I had only paid off 35 months and not 36 months even though they had take 36 mortgage payments from my account.

    I also received a letter informing me of my new (crap) variable rate and it said the number of months remaining was 325 out of 360???

    I rang up KBC Homeloans and they said that the letter was a mistake, it should say 324.

    I told them that the balance remaining on my mortgage was for only 35 payments they said no I had made 36 payments but the first payment was an interest only payment!!!!

    I feel like I just gave them 800+ euros for nothing, I never signed up to pay 1 interest only payment. It doesn't make sense??? They said this is normal.

    Is this normal and do all mortgage lenders do this?? Does everybody on a KBC Homeloan know this??


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    #2
    Kipperhell
    Closed Accounts Posts: 1,477 ✭✭✭Kipperhell


    I do actually think it is normal but can't remember why.

    Anyway your first mortgage payment is mostly interest only any way. It didn't cost you €800+ more like €80 off your principle.


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    #3
    GigaByte
    Closed Accounts Posts: 515 ✭✭✭GigaByte


    Kipperhell wrote: »
    I do actually think it is normal but can't remember why.

    Anyway your first mortgage payment is mostly interest only any way. It didn't cost you €800+ more like €80 off your principle.

    Its wasn't mostly interest only, it was just interest. The point is, I paid them 800+ euros for nothing as it has no effect on my mortgage but it has the effect of me being out of pocket for 800+ euros for nothing.


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    #4
    eth0_
    Registered Users Posts: 10,846 ✭✭✭✭eth0_


    Was the first payment for the exact same amount as the other 35? If so, how can that be 'interest only'? It would be far lower than €800 if that were the case, surely?


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    #5
    kmick
    Registered Users Posts: 3,375 ✭✭✭kmick


    GigaByte wrote: »
    Its wasn't mostly interest only, it was just interest. The point is, I paid them 800+ euros for nothing as it has no effect on my mortgage but it has the effect of me being out of pocket for 800+ euros for nothing.

    It was not for nothing - it was an interest payment. Never heard of this before though.


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    #6
    Kipperhell
    Closed Accounts Posts: 1,477 ✭✭✭Kipperhell


    GigaByte wrote: »
    Its wasn't mostly interest only, it was just interest. The point is, I paid them 800+ euros for nothing as it has no effect on my mortgage but it has the effect of me being out of pocket for 800+ euros for nothing.

    Yes
    You couldn't get the mortgage without it so it had an effect on your mortgage. It's true cost to you is only about €80 as it was still your interest.
    eth0_ wrote: »
    Was the first payment for the exact same amount as the other 35? If so, how can that be 'interest only'? It would be far lower than €800 if that were the case, surely?

    Not far lower, only a slight bit lower at the start especially over 35 years


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    #7
    GigaByte
    Closed Accounts Posts: 515 ✭✭✭GigaByte


    eth0_ wrote: »
    Was the first payment for the exact same amount as the other 35? If so, how can that be 'interest only'? It would be far lower than €800 if that were the case, surely?

    No the first payment was for just over €800 (so they said) then I started paying the full amount of just over €1100. I'll have to check this out with the bank.

    My point is, I have a letter from them that show me paying €1100 for 3 years. At the end of my fixed term the letter shows my balance at 150,000 but my balance at the end of the 3 years is 150,300. In the break down of the payments it shows in my first year I'll make 12 payments of €1100 euro's no where does it say anything about paying 1 month interest only followed by 11 months of my normal mortgage payments.


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    #8
    GigaByte
    Closed Accounts Posts: 515 ✭✭✭GigaByte


    It had no effect on my mortgage. If it did I wouldn't be exactly one month short. It's not out buy a few cent it is exactly one months full mortgage payment short.

    Just to help with figures.


    This is what happened
    Mortgage amount = 210,000 after one months interest only payment, mortgage balance = 210,00

    This is what should have happened
    Mortgage amount = 210,000 after one months fixed mortgage payment, mortgage balance = 209,700


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    #9
    astrofool
    Registered Users Posts: 16,631 ✭✭✭✭astrofool


    Well, you're not out €800, that would always have to be paid. You're out the interest on €300 over the three years you were on the rate (~€15?). You could have paid it at the time when you noticed it was €300 short, and you can still pay the €300 off now.


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    #10
    Kipperhell
    Closed Accounts Posts: 1,477 ✭✭✭Kipperhell


    Your figures don't make any sense to me. You are claiming your mortgage has reduced by 60k yet you only paid 40K? I would expect your mortgage to be closer to 200k assuming you made no extra payments

    It seems to be clear you paid an interest only payment the first time as it was less than your normal payments


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    #11
    GigaByte
    Closed Accounts Posts: 515 ✭✭✭GigaByte


    astrofool wrote: »
    Well, you're not out €800, that would always have to be paid. You're out the interest on €300 over the three years you were on the rate (~€15?). You could have paid it at the time when you noticed it was €300 short, and you can still pay the €300 off now.

    You're right! I have paid it now and it's bang on what it should be. I didn't realise I could do that.

    Still if they had just taken the original amount off I wouldn't have had to do this now. :)


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    #12
    GigaByte
    Closed Accounts Posts: 515 ✭✭✭GigaByte


    Kipperhell wrote: »
    Your figures don't make any sense to me.

    Sorry the first figures (150,000) where a different mortgage amount. :o
    Kipperhell wrote: »
    It seems to be clear you paid an interest only payment the first time as it was less than your normal payments

    Yes, its clear now but I still can't see where it says this in any of my documents from KBC Homeloans? :confused:


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