I was shopping around for mortgages last year and I met a sales guy from one particuar bank who gave me a demo of their calculator to see how much I could save.
He asked me for my monthly income and then for all my expenses each month under various headings. The result was a drastic saving in interest and term when compared with a conventional mortgage even with higher interest rates. This did not seem right so I had another look at it later.
It turns out that calculator assumes any surplus every month builds up indefinitely in your current account and therefore reduces the interest and term drastically. I did not think that this was fair in that most people, as I did, tend not to think of every expense, and this implies a higher surplus per month. In my case, it was incorrectly assumed that around €500 per month would build up in my account every month and of course this meant that my mortgage would be paid off a lot quicker. If I had €500 per month over, I would put into my variable rate mortgage which would clear that more quickly also!
My biggest objection was that it was not clear that this was the basis on which the calcuator was producing these very attractive figures. Many people could easily be misled into going for this product just because they underestimated their expenditure on their kids clothes or the like.
The fact that the calculator is so unnecessarily convoluted and that the salesman would not give me printout of my results leads me to believe that this is not an entirely accidental result.
Has anyone else had any similar experiences?
He asked me for my monthly income and then for all my expenses each month under various headings. The result was a drastic saving in interest and term when compared with a conventional mortgage even with higher interest rates. This did not seem right so I had another look at it later.
It turns out that calculator assumes any surplus every month builds up indefinitely in your current account and therefore reduces the interest and term drastically. I did not think that this was fair in that most people, as I did, tend not to think of every expense, and this implies a higher surplus per month. In my case, it was incorrectly assumed that around €500 per month would build up in my account every month and of course this meant that my mortgage would be paid off a lot quicker. If I had €500 per month over, I would put into my variable rate mortgage which would clear that more quickly also!
My biggest objection was that it was not clear that this was the basis on which the calcuator was producing these very attractive figures. Many people could easily be misled into going for this product just because they underestimated their expenditure on their kids clothes or the like.
The fact that the calculator is so unnecessarily convoluted and that the salesman would not give me printout of my results leads me to believe that this is not an entirely accidental result.
Has anyone else had any similar experiences?