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Mortgage provider extended lenght of mortgage

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  • 06-04-2012 12:35pm
    #1
    janja
    Registered Users Posts: 412 ✭✭


    We took out 20 year mortgage in 1992 and have just realised that our mortgage provider are claiming our mortgage wont be repaid for 20 years 9 months even though all payments were made on time, having queried this they said
    'The interim interest was correctly charged from the date the loan cheque was cashed on 11 December 1992 to 31 December 1992. As we cannot know beforehand the exact date on which your solictor will cash the loan cheque
    (the completition date), the monthly repayments quoted in the Loan Offer letter are not calculated on the sum of the capital borrowed plus the interim interest, just on the capital alone. The interim interest has the effect of increasing the loan balance, therefore more repayments are required to pay it off. This caused the maturity date of your loan to be extended by 9 months'
    Does this seem right to you guys?
    Janja


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    #2
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    janja wrote: »
    We took out 20 year mortgage in 1992 and have just realised that our mortgage provider are claiming our mortgage wont be repaid for 20 years 9 months even though all payments were made on time, having queried this they said
    'The interim interest was correctly charged from the date the loan cheque was cashed on 11 December 1992 to 31 December 1992. As we cannot know beforehand the exact date on which your solictor will cash the loan cheque
    (the completition date), the monthly repayments quoted in the Loan Offer letter are not calculated on the sum of the capital borrowed plus the interim interest, just on the capital alone. The interim interest has the effect of increasing the loan balance, therefore more repayments are required to pay it off. This caused the maturity date of your loan to be extended by 9 months'
    Does this seem right to you guys?
    Janja

    No, that sounds ridiculous! If you borrow over 25 years that's 300 repayments and provided loan repayments are made every month your loan should finish when 300 payments are made. Even allowing for interim interest that would only mean an additional couple of weeks interest and wouldn't equate to a full months payment, never mind 9! What bank is your mortgage with?


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    #3
    Wile E. Coyote
    Registered Users Posts: 1,560 ✭✭✭Wile E. Coyote


    No that sounds like BS to me. You took out a 20 year loan and that starts from the day you receive your cheque. Any changes in interest should have been calculated at the time and your repayment amended to allow you complete the loan on time.


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    #4
    janja
    Registered Users Posts: 412 ✭✭janja


    killers1 wrote: »
    No, that sounds ridiculous! If you borrow over 25 years that's 300 repayments and provided loan repayments are made every month your loan should finish when 300 payments are made. Even allowing for interim interest that would only mean an additional couple of weeks interest and wouldn't equate to a full months payment, never mind 9! What bank is your mortgage with?
    EBS building society


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    #5
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    janja wrote: »
    killers1 wrote: »
    No, that sounds ridiculous! If you borrow over 25 years that's 300 repayments and provided loan repayments are made every month your loan should finish when 300 payments are made. Even allowing for interim interest that would only mean an additional couple of weeks interest and wouldn't equate to a full months payment, never mind 9! What bank is your mortgage with?
    EBS building society

    I'd suggest you check with them again. There is no way that 3 weeks interim interest can add 9 months repayments to the term. It's just not possible. Were there ever any moratoriums/reduced repayments or int only periods since the loan issued?


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    #6
    janja
    Registered Users Posts: 412 ✭✭janja


    killers1 wrote: »
    I'd suggest you check with them again. There is no way that 3 weeks interim interest can add 9 months repayments to the term. It's just not possible. Were there ever any moratoriums/reduced repayments or int only periods since the loan issued?

    No the only thing we did was pay off a lump sum to reduce the amount we owed.


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    #7
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    janja wrote: »
    No the only thing we did was pay off a lump sum to reduce the amount we owed.

    Then it makes even less sense if you made a repayment against the capital you would have reduced the term if you kept the repayments the same? Or did you ask for the repayment to reduce and keep the original term? either way it doesn't explain an additional 9 months repayments...


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    #8
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    killers1 wrote: »
    janja wrote: »
    No the only thing we did was pay off a lump sum to reduce the amount we owed.

    Then it makes even less sense if you made a repayment against the capital you would have reduced the term if you kept the repayments the same? Or did you ask for the repayment to reduce and keep the original term? either way it doesn't explain an additional 9 months repayments...

    The only possible explanation as I see it is that you are mistaken about the original term of the mortgage. Any chance you may have borrowed over 25 years and not 20 and the lump sum payment has reduced the term to 20 yrs 9 mths? There's no other plausible explanation....


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    #9
    janja
    Registered Users Posts: 412 ✭✭janja


    killers1 wrote: »
    Then it makes even less sense if you made a repayment against the capital you would have reduced the term if you kept the repayments the same? Or did you ask for the repayment to reduce and keep the original term? either way it doesn't explain an additional 9 months repayments...
    We reduced the payment but kept the original term


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    #10
    janja
    Registered Users Posts: 412 ✭✭janja


    killers1 wrote: »
    The only possible explanation as I see it is that you are mistaken about the original term of the mortgage. Any chance you may have borrowed over 25 years and not 20 and the lump sum payment has reduced the term to 20 yrs 9 mths? There's no other plausible explanation....
    No defo 20 year mortgage


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    #11
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    janja wrote: »
    No defo 20 year mortgage

    Think you need to get back on to them...something's not right...


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    #12
    GerardKeating
    Registered Users Posts: 7,623 ✭✭✭GerardKeating


    janja wrote: »
    No the only thing we did was pay off a lump sum to reduce the amount we owed.
    janja wrote: »
    We reduced the payment but kept the original term
    • The Lump sum would reduce the term of the loan
    • Reducing the payments would increase the term of the loan,

    I would assume reducing the payments causes a bigger increase (nine months) than the reduction cause by the lump sum


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    #13
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    GerardKeating wrote: »
    • The Lump sum would reduce the term of the loan
    • Reducing the payments would increase the term of the loan,

    I would assume reducing the payments causes a bigger increase (nine months) than the reduction cause by the lump sum

    No. When you make a lump sum payment against the capital you get the choice of a) reducing the monthly repayment and clearing the loan over the original term or b) keeping the repayment the same and shortening the term... Neither scenario allows for an increased term of 9 mths...


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    #14
    GerardKeating
    Registered Users Posts: 7,623 ✭✭✭GerardKeating


    killers1 wrote: »
    No. When you make a lump sum payment against the capital you get the choice of a) reducing the monthly repayment and clearing the loan over the original term or b) keeping the repayment the same and shortening the term... Neither scenario allows for an increased term of 9 mths...

    It does if someone mis-caculates the reduced repayment and/or lump required.


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    #15
    killers1
    Registered Users Posts: 1,443 ✭✭✭killers1


    GerardKeating wrote: »
    It does if someone mis-caculates the reduced repayment and/or lump required.

    These things aren't worked out by a person with a calculator....The OP made a lump sum lodgement and asked the bank to keep the term at the original 20 years...The computer system would work out the relevant repayment to ensure the loan finishes on time...


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