Ensuring extra payments are going against capital

[triona]

Hi,

We took out a mortgage in March 2006 which we pay every fortnight. In March 2007 we requested that €50 extra be paid off the capital with every repayment and in then in July we upped this to €100. We've had a number of problems with the bank when the interest rates increased (we have a tracker mortgage) where they took the additional money from our extra payments rather than upping the amount they took out of our account.
As a result of this, I want to be able to check that they are definitely putting the extra money towards the capital. I have our mortgage statements from the last two years but it doesn't help. I've tried to use Karl Jeacle's calculator but with all the rate rises over the past two years I can't do the calculation accurately. When I use the calculator there is no place for putting in fortnightly prepayments - only monthly.

How can I make sure they are following our requests?

 

[marksa]

depends on the bank, but in theory they should be able to show daily interest accruals, and then the interest capitalisation. These would be driven by the daily oustanding balance where it should include all your payments. BUT this is very much dependent on your bank as to whether they will give you this info. If you have the misfortune of being with ACC et al, then your calculations are really smoke and mirrors! Some banks will only give you value for your overpayments at end of month, and similarly charge interest for the full month giving value to your normal payments at month-end. In your case, you are effectively making 13 months payments in each year.

If you are any good at Excel, you could build a calculator yourself for the daily movements based on your statements - one row per day... I built a calculator some years ago which worked out overpayments and the TRS benefit etc. It could be adjusted for rate changes also. If you really want to have it... PM me.