Mortgage statement

shkyler

Registered User
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Just wondering if someone can help me here, does the closing balance at the end of your mortgage statement include any credit that you have accrued or is it the closing balance then minus the credit?

Example: Closing balance 250k, Credit 10k, does this mean we only owe 240k?

Thanks in advance!
 
What do you mean credit?

If you have paid off more than is due this should be reflected in the balance.
 
Bank statements differ, based on my own experience with one the balance outstanding is the actual balance, the credit relates to how much you are ahead as such against the scheduled repayments, I presume you have been overpaying or paid a lump sum? Best to ask the bank but I would imagine you owe 250k
 
Example: Closing balance 250k, Credit 10k, does this mean we only owe 240k?

It has been reported here in the past that some lenders keep overpayments in a separate account, this might explain your closing balance of €250K, Credit €10K, and would suggest you owe €240K.

If you name the lender you might get a more informed reply from some with mortgages from the same lender.
 
I have never heard of them in a separate account, they are usually just shown in a different column if you were looking at the banks computer screen.
 
Possibly it is just a different column, or a credit held in the same account but not applied, I don’t recall exactly what was reported.

I have never had an issue with any of my lenders, If I paid €10K or whatever amount off, it was credited to my mortgage that day and my outstanding balance dropped by that amount that day, while this is the norm with most lenders, some do differ on how they deal with overpayments.

If we knew the lender, possibly a more informed reply could be given.
 
Im with PTSB and we have been overpaying and have 10k in credit, 4 columns on the mortgage statement are Transaction Amount, Interest Due, Arrears/Credit Balance and Current Loan Balance.
Our Current Loan Balance says 250k and Credit Balance says 10k we presumed the current loan balance didn't include the credit so thought we only owed 240k PTSB claiming the current loan balance already includes the credit but this just doesn't seem to add up, have a feeling we're getting stiffed somewhere!
 
Well from my reading of that you owe 250k, the Arrears/Credit Balance column is just an internal accounting thing really and just shows how far ahead or behind you are on the scheduled payments. The current loan balance is the balance outstanding.

There are repayment calculators online that calculate the declining balance of a mortgage using your original amount and rate, this will show you what your balance should have been had you not paid any extra, presumably that will be higher than what you currently owe.
 
I was talking to my mortgage provider (start) recently about the possibility of paying more than is due each month and they said that if we do that it just builds up as credit as they can't keep recalculating the mortgage interest/term each month and then when it is a sizeable amount (a few thousand) we can request for it to be put against the capital and they will recalculate the mortgage. I took from the conversation that the excess money would just be sitting in the account, not saving me interest on the mortgage and not earning me interest either - in fact it would probably be earning start mortgages interest without any benefit to me. So if you are 10,000 in advance shykler I suggest you speak to them about what exactly is happening that excess and what your options are.
 
Usually when lenders talk of it building up as a credit on the account and not put against the capital and recalculated what it means is that the original amount/term/repayments have not been changed to reflect the additional payments. This does not necessarily mean that you are not saving interest on the mortgage.

Most lenders have a minimum amount that can be considered a lump sum payment, usually a percentage of the original loan amount, until this sum is reached they will not officially apply the overpayment against the mortgage and recalculate your repayments to reflect the lower balance if one wanted to do that. Most people want to keep the repayments the same and reduce the term, this is not officially done either until the minimum lump sum is reached.

The interest on a mortgage is calculated daily on the outstanding balance, that is the balance after interest is added and payments taken off so paying extra reduces the balance and consequently the interest being charged therefore giving you a saving in the long term.

The fact that the bank considers it a credit is just the way the computer programme sees it, it sees you ahead on the scheduled payments as per the original loan offer because you have been paying extra but you are saving as the balance the interest is being charged on is reduced by your overpayment and in turn your interest is less.

Maybe there is a bank doing it a different way but to the best of my knowledge most of them operate somewhere along the lines I have tried to explain.
 
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Personally I think credits like this should be left sitting there on the account, provided the bank is dealing with them in the way I explained, the only reason for getting them officially put against the balance would be if you want to reduce your monthly repayments to reflect the new lower balance and keep the term of the loan the same. This might be necessary if you example someone was made redundant and got another lower paid job, a redundancy lump sum could be put against the mortgage and the monthly repayments reduced to better match the new income.

Much more flexible to leave the repayments the same and leave the term alone, that way you can continue to overpay but if you need to drop back for any reason to the original scheduled payments you can without any hassle trying to extend term again. Either way if you continue to overpay your mortgage will finish earlier than intended whether the bank officially recalculates the term or not.
 
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