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Mortgage Balance increased over 18 months

  • 11-04-2017 3:29pm
    #1
    kormak
    Registered Users Posts: 887 ✭✭✭


    Requested a balance statement on our mortgage and the balance owed was higher than what it was 19 months ago... This alarmed me and I requested an explanation from the bank.
    The bank advised me that during this time, our account had been on forbearance for a period of 5 months of C&I moratorium + 7 months interest only. The increase in the balances was due to interest being charged to the account.

    So am I right in saying that if you go on a full moratorium on your mortgage, banks will increase the balance owed by interest charges?
    I'm not massively financially savvy, but this seems somewhat wrong.


Comments

  • #2
    [Deleted User]
    Posts: 5,121 ✭✭✭ [Deleted User]


    Unless you explicitly agreed with your bank that no further interest would be charged to your account, then yes I would expect the amount you owe to be increased by the interest being charged on the mortgage during a payment break.


  • #3
    kormak
    Registered Users Posts: 887 ✭✭✭kormak


    Deleted User wrote: »
    Unless you explicitly agreed with your bank that no further interest would be charged to your account, then yes I would expect the amount you owe to be increased by the interest being charged on the mortgage during a payment break.

    Nope! and that wasn't explained to me at the time either. Thanks for your reply.


  • #4
    phormium
    Registered Users, Registered Users 2 Posts: 3,345 ✭✭✭phormium


    Yes, that is totally correct, during the moratorium the interest still accrues. You are charged interest on a daily basis on the amount outstanding, the amount wasn't going down as you had a break from payments so neither the capital nor the interest was being paid for that time so this increases the outstanding balance.

    Interest only, rather than a moratorium, would mean the outstanding balance would remain stationery as you would be paying the interest on it each month and just not the balance.


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