Been paying wrong rate on Mortgage

yellowmonkey

Hi
I recently was made redundant and went into my bank just to inform them in a change in my circumstances... we are ok for the minute but the rainy day fund could empty soon and wanted to make them aware of my situation.

When I was speaking to the lady in the bank she was going over our mortgage details and mentioned that we are in a 5 year fixed term which finishes in 6 months time... this startled me as we signed up for a 10 year fixed term in 2007. I asked her to check but all the systems showed was a 5 year term that started in '07.

I went home and dug through our paperwork and have forms that clearly state we signed up for a 10 year term at that time....

Now here's the rub!

The rate for the 5 year offered was 5.190%
The rate for the 10 year was 5.390%

We opted for the security of locking in what we were able to afford for as long as possible and to know what was coming out of the account for the max length of time.

However and I have honestly just noticed this the rate that we have been paying for the last 5 years has been at the 5.190% (the 5 year fixed rate)

What happens now?
I am going to have make the bank aware that we signed for the 10year will they make us pay the shortfall?
Who's fault is this? Will they say I should have been aware of the rate going out etc?
Is it not their issue for processing the wrong details in the first instance?

What is the going rate now? will we get a better deal now if we fix for another 5 years now and say nothing?

Help please extremely confused and have enough to worry about with being newly unemployed

Thanks for any help or advice in advance

Cheers

killers1

yellowmonkey wrote: »

Hi
I recently was made redundant and went into my bank just to inform them in a change in my circumstances... we are ok for the minute but the rainy day fund could empty soon and wanted to make them aware of my situation.

When I was speaking to the lady in the bank she was going over our mortgage details and mentioned that we are in a 5 year fixed term which finishes in 6 months time... this startled me as we signed up for a 10 year fixed term in 2007. I asked her to check but all the systems showed was a 5 year term that started in '07.

I went home and dug through our paperwork and have forms that clearly state we signed up for a 10 year term at that time....

Now here's the rub!

The rate for the 5 year offered was 5.190%
The rate for the 10 year was 5.390%

We opted for the security of locking in what we were able to afford for as long as possible and to know what was coming out of the account for the max length of time.

However and I have honestly just noticed this the rate that we have been paying for the last 5 years has been at the 5.190% (the 5 year fixed rate)

What happens now?
I am going to have make the bank aware that we signed for the 10year will they make us pay the shortfall?
Who's fault is this? Will they say I should have been aware of the rate going out etc?
Is it not their issue for processing the wrong details in the first instance?

What is the going rate now? will we get a better deal now if we fix for another 5 years now and say nothing?

Help please extremely confused and have enough to worry about with being newly unemployed

Thanks for any help or advice in advance

Cheers

This may actually work out in your favour. Before you start insisting on being on the 10 year rate you need to compare what the bank will allow you to fix at over the next 5 years and see whether that is above or below the rate you should have been on? Which bank is your mortgage with? Do you still want to be on a fixed rate or is their variable rate significantly cheaper which would reduce your repayments while you seek alternative employment? You can always fix again for 5 yrs once you have found a new job.. Unfortunately or fortunately in some cases banks do make errors in relation to the rates charged to accounts.. If they have had you on the 5 yr lower rate for the past 5 yrs they can't really chase you for the shortfall as you have made repayments on the rate they applied to the account. If it was a case that you had been overcharged they would certainly need to refund you.

NinjaTruncs

First thing find out what rate you go onto in 6 months, did you go straight onto a fixed rate when you took out the mortgage if so you could go onto a tracker, usually something like ECB + 1-1.5%, if you go onto a tracker it may be best to go onto that as your repayments will drop significantly.

Read your documents that should say what rate you go onto.

If you don't go onto a tracker find out the new 5 year rateis, if it's less than the 10year rate take that if it's higher you need to start working out the sums, if you insist on going onto the 10year rate they may back date the difference which could add up to quite a bit.

chris85

As other posters have said this may be good for you. You may get onto a lower rate, especially if its a tracker rate.

yellowmonkey

The mortgage is with Bank of Ireland.

We have always been fixed rate firstly for 2 years then this 5/10 year

looking at the current rates... saying nothing and going variable could be the way forward

yellowmonkey

Thanks for all the replies

chris85

yellowmonkey wrote: »

The mortgage is with Bank of Ireland.

We have always been fixed rate firstly for 2 years then this 5/10 year

looking at the current rates... saying nothing and going variable could be the way forward

Be sure to check your original mortgage agreement and see if it was a tracker you signed up to. Have you had a look at this?

yellowmonkey

had a look through all documents and can not find any mention of a tracker... at the start we were offered fixed and variable
We opted for 1 year fixed then subsequently a 2yr fixed and 5/10 yr fixed.

Will this change anything?

Thanks

killers1

There's nothing you need to do for the time being. You have 6 months left on your existing 5 yr fixed rate. Just before the expiry of the fixed period BOI will write to you giving you the options of their current rates that you can move on to. If you are entitled to a Tracker Rate this will be one of the options. BOI's current 5 yr fixed rate for existing business is 6.05% (new business rate is 5.7%) so if these rates don't reduce in the next 6 months and the tracker option is not available it may make sense to point out their error and insist on the 10 yr rate being applied for the rest of the term. I would advise you to stand firm that this is their mistake and you are not willing to repay to 0.2% rate difference that should have been applied. Wait and see what rate options you are given when the time comes and go from there...