Mortgage Interest Calculation

[IOMGuy]

I have an endowment mortgage linked to two life assurance policies. At the end of August these two policies matured and the money generated paid to directly the mortgage lender by the life assurance company. These payments reduced the balance of the loan to around £1,000 which I intend to pay off this month (when the loan completes). However, I noticed on my bank statement for that the lender has charged me the full amount of interest for last month (September) on October 3rd. Is this right? My understanding is that the interest is calculated daily and hence this months payment should have reduced considerablly as for most of September the loan was only £1,000.00

 

Any advice, guidance would be much appreciated.

[citizenB]

I think you are probably correct. I will try and find someone who will know for sure.

[citizenB]

Have sent out an S.O.S. for you, but you might want to think about writing to the Lender to find out how they have arrived at their figures.

 

Apparently HSBC used to add the interest on first, then deduct any large payments such as endowment maturities.

[ims21]

Hi

 

Dropping in as requested by CB

 

Typically the interest is calculated daily and applied to the account monthly.

 

If most of the capital was paid off using these policies then you would expect the interest for the following month to be lowere but as CB sugfgests, write and ask how the figures has been calculated and see what comes back.

 

Regards

 

ims

[IOMGuy]

Thanks for the feedback - I will write to them to ask. What really annoyed me was that they 'lost' one of the payments for 10 days - they say their systems rejected it after a merger of two accounting systems and I am pretty sure they have not backdated the 'lost' payment to the date when they origibally received the cheque.

[martin2006]

I think i'd be more inclined to go to the branch and sort it out there as every day that passes will attract further interest due to snail mail and if it drags out for a month or two while they are sorting it out you will be out of pocket.

 

Just my tuppence worth.

[IOMGuy]

The mortgage is with GEMoney who as far as i know do not have any branches so I am restricted to writing and calling their customer service centre. However, your suggestion is a good one - I will call again today to find out how they calculated last month's payment.

[martin2006]

The mortgage is with GEMoney .

 

The sooner you sort this out the better, they love to chuck a charge or two on at any opportunity.