Breaking out of a fixed rate Mortgage

[Pope John 11]

I wrote to my bank in Feburary '09 requesting to break out of my fixed rate on my interest only mortgage. I hand delivered an agreed breakout rate cheque with the letter to my mortgage company.

In the letter I stated that I wanted to break out of the fixed rate, & specifically wanted to be put onto the standard variable rate, & I wanted to pay both 'Capital & Interest' (this I underlined).

The cheque fee was deducted from my mortgage in Feb '09.

However now I am after discovering, after recieving a letter today, that I have been paying interest only up to Nov 09.

Where do I stand on this, any comments appreciated.

 

[rameire]

get the bank to check your correspondance and advise them you are making a complaint as the request was not processed as requested.
tell them you want confirmation of the retrieval of the correspondance and the account fixed as you requested, and that you are giving them 10 days, and if you do not receive the information you will proceed to the ombudsman.
also advise them you are putting this in writing and keeping a copy for the ombudsman and sending the original to them.

 

[Pope John 11]

get the bank to check your correspondance and advise them you are making a complaint as the request was not processed as requested.
tell them you want confirmation of the retrieval of the correspondance and the account fixed as you requested, and that you are giving them 10 days, and if you do not receive the information you will proceed to the ombudsman.
also advise them you are putting this in writing and keeping a copy for the ombudsman and sending the original to them.

Thanks for that Rameire. Yes I have asked them to get hold of the letter that I gave them previously. She could not find it on the file today, so she will phone me tomorrow.

I take on board your comments as above & I will wait for her response tomorrow. I was due to come off this fixed rate in June '09 & one of the main reasons why I came off this rate was that I wanted to start paying the capital immediately.

 

[Pope John 11]

Bank never got back to me yesterday. I phoned them today & was told that they cannot find the letter. Of course they told me that they tired to call me yesterday, no missed calls on my phone, had it with me all the time. They seem to say that they cannot do anything about it. A team leader is to come back to me before 5pm, I doubt it though. I will update when I recieve the next call.

 

[Pope John 11]

I have been told yesterday by my bank that it will take 4 weeks for them to internally investigate the case. They will then proceed to issue me with a letter.

Should I proceed ahead with writing to them & sending a copy of the letter to the Ombudance man

 

[Earnie Moore]

You can fax the original letter sent to them earlier, indicating that you have proof on hand. This will speed up matters and settle the issue quickly.

 

[Pope John 11]

You can fax the original letter sent to them earlier, indicating that you have proof on hand. This will speed up matters and settle the issue quickly.

Is this the correct way to go about things? After all they were the ones that lost the letter. I have a copy of both the letter & the cheque. The original letter & cheque were hand delivered to their office, as it was only 5-10mins walk from my office.

Should I write to them directly and cc the letter to the Ombudance man? Should I sent a copy of the letter/cheque to them or only to the Ombudance man?

 

[Robin Banks]

I think the Ombudman will tell you to wait until the bank has finished their investigation and contact him if you're not happy with the result.

Normally you do not go to the ombudsman until you have exhausted normal complaint procedures with the organisation itself.

to what extent have you been financially disadvantaged by this?

i'd imagine your repayments would have been a lot higher if you were repaying principal rather than just IO.

 

[chlipps]

I agree with Earnie Moore. Send them copy or call in with copy. Its in your interest to get it sorted regardless of who is at fault. Call in with copy of letter and cheque. Request meeting with bank manager to get it resolved and ask why it takes 1 month to resolve.

 

[Pope John 11]

I agree with Earnie Moore. Send them copy or call in with copy. Its in your interest to get it sorted regardless of who is at fault. Call in with copy of letter and cheque. Request meeting with bank manager to get it resolved and ask why it takes 1 month to resolve.

I will do this so. I will call in to discuss the issue.

I think the Ombudman will tell you to wait until the bank has finished their investigation and contact him if you're not happy with the result.

Normally you do not go to the ombudsman until you have exhausted normal complaint procedures with the organisation itself.

to what extent have you been financially disadvantaged by this?

i'd imagine your repayments would have been a lot higher if you were repaying principal rather than just IO.

Yes, but the capital left would be alot higher on IO, meaning I would have paid more.

 

[Robin Banks]

Yes, but the capital left would be alot higher on IO, meaning I would have paid more.

The capital balance will be higher on IO, but the monthly repayments are a lot higher on P&I.

Say if you owe €200k at 3% your IO payments are €500 a month. After 1 year you've paid €6,000 and the balance is still €200k.

The same €200k at 3% P&I over 20 years is €1,109 per month. After 1 year you'd have paid €13,310.38 consisting of €7,411.72 principal and €5,898.66 interest and the balance is €192,588.30. Your extra repayments above IO come to €7,310.38. The extra interest of IO vs P&I (€6,000 vs €5898.66) works out to €101.34.

So in year one of that 20 year mortgage you'd need to pay the bank an extra €7,310.38 in order to pay €101.34 less interest.

Unless they have been charging you the full monthly P&I repayment €1,109, but not deducting your prinicpal? Give us the balance, interest rate and remaining term (ballpark figures) to see what the cost to you has been.

 

[Pope John 11]

The capital balance will be higher on IO, but the monthly repayments are a lot higher on P&I.

Say if you owe €200k at 3% your IO payments are €500 a month. After 1 year you've paid €6,000 and the balance is still €200k.

The same €200k at 3% P&I over 20 years is €1,109 per month. After 1 year you'd have paid €13,310.38 consisting of €7,411.72 principal and €5,898.66 interest and the balance is €192,588.30. Your extra repayments above IO come to €7,310.38. The extra interest of IO vs P&I (€6,000 vs €5898.66) works out to €101.34.

So in year one of that 20 year mortgage you'd need to pay the bank an extra €7,310.38 in order to pay €101.34 less interest.

Unless they have been charging you the full monthly P&I repayment €1,109, but not deducting your prinicpal? Give us the balance, interest rate and remaining term (ballpark figures) to see what the cost to you has been.

Cheers for that Robinbank, figures are €60,000, 3.99%, 25yrs, I got to recheck the no. of yrs later though.

 

[Robin Banks]

Cheers for that Robinbank, figures are €60,000, 3.99%, 25yrs, I got to recheck the no. of yrs later though.

€60k is a very small mortgage - lucky you.

That would cost €199.50 a month IO or €2,394 a year.

P&I would be €316.37 a month. After one year your total payments would be €3,796.44 of which €1428.40 would be principal and €2368.08 is interest.

The interest difference between IO and P&I for one year is 26 euro.

Hardly worth bothering about really.