Ballooned Repayment - Bank Miscalculation on Annuity Mortgage

Discussion in 'Mortgage arrears & negative equity case studies' started by ConfusedPunter, 11 Oct 2018.

  1. ConfusedPunter

    ConfusedPunter New Member


    We recently made a minor change to our Home Mortgage (we changed the date of the month that the repayment is due). As a result we were informed, and accepted, that there may be a minor recalculation of interest resulting in an increase of "no more than 50 euro".

    Imagine our shock when the letter arrived, informing us that, as advised, our repayment had "increased slightly" to almost *double* the current amount! When we contacted the bank they indicated that this was due to a shortfall on the balance that their system had spotted and that the grossly increased repayment was to recover the shortfall (we are towards the end of the term).

    We have always paid our repayments, as calculated and charged by the bank, since the beginning. We've never gone into arrears. Clearly the bank have miscalculated our repayments along the way and are trying to rectify their own mistake by punishing us. What's galling about this is that we're now being dealt with by their Arrears Collection department (who are saying there's nothing they can do).

    Do we have a leg to stand on to refuse to repay these 'balloon' payments now, and if we do are we then technically in arrears? Surely the bank should be forced to accommodate us due to their own inadequacy?
  2. vandriver

    vandriver Frequent Poster

    How much was the monthly repayment,and how much was borrowed over how long?
  3. ConfusedPunter

    ConfusedPunter New Member

    Regarding monthly payment, I don't want to go into too much detail (as, who knows, this could get legal). Suffice it to say that, after making what they said would be a slight adjustment (to account for the repayment date moving from the start to the end of the month), the repayment amount they are requesting has now almost doubled. The only explanation I can come up with is that, when they went to make this minor adjustment, they realised they've messed up on the capital repayment schedule and are now trying to recover it in what's left of the term.
  4. Blackrock1

    Blackrock1 Frequent Poster

    two things, they have messed up on their calcs so you need to get someone to look at this make sure you havent been over charged interest etc,

    the other thing is that you do owe the money, so they arent punishing you as such, it may be that you need to restructure the mortgage with them to extend it out a little or something, but either way you will have to pay the correct amount back.
    RedOnion likes this.
  5. Brendan Burgess

    Brendan Burgess Founder

    This is a tough one. It's hard for us to understand without more detail.

    It just doesn't sound right.

    The only way such a mistake could happen is if they put in a much later maturity date than was originally agreed.

    Or if there is an error in their system.

    As Blackrock pointed out, yesterday you owed €40k and today you owe €40k. That has not changed.

    You definitely should not be in arrears and have your ICB record damaged due to their error.

    Did they write to you and explain the error? I would not accept an explanation over the phone.

    Check out your statements from the start. I have written a Key Post here:

    How to check your mortgage statement
    MugsGame likes this.
  6. ConfusedPunter

    ConfusedPunter New Member


    Thanks for the feedback folks. Part of this is to check that I'm not going mad!

    Of course I have no issue with the concept of paying back what I owe - I'm not one of the 'money grows on trees' crowd! What I do have an issue with is that, due to them messing up what I understand to be a fundamental part of their job (which is to calculate the correct repayment amounts over the term of an Annuity mortgage), they try to foist this on me with what are essentially balloon payments that I'll go into arrears on if I don't pay them. One theory is that, at a point in the past, they messed up, either when we negotiated a tracker, or maybe when we took out extra mortgage sub-accounts with them (they've all got slightly different terms, but all ending within a year of each other).

    When we argued that it's only this small (repayment date adjustment) that has triggered this large repayment recalculation, and what would they have done if we had continued as we were previously to the end of the term: they were honestly arguing that we would have been presented with a bill for the outstanding balance (many thousands) to be paid on the final date of the term. To my layman's brain, this is a balloon payment, which should not happen with an annuity mortgage if the bank is doing its job.

    Latest update: On the phone to them today and, having banged my head on the wall with the Arrears people and their "there's nothing we can do" attitude, I finally got onto a manger who is prepared to admit there has been some form of 'banking error'. We'll see where this goes. A reasonable outcome I hope.

    And Brendan, thanks for the advice. I will make sure that I get this admission of an error on their part on paper!
  7. Brendan Burgess

    Brendan Burgess Founder

    Hi CP

    Don't wait for them to write to you.

    You should write to them today.

    Dear Mr Manager

    I refer to our telephone conversation today.

    I am glad that you have finally acknowledged that bank made an error in the calculation of my repayments .

    Please confirm in writing to me that while this is being resolved the payments will be left as they are so that my account does not go into arrears.

    Please also write to me explaining how the error occurred and your proposals for dealing with it.


    If this goes to the Ombudsman you will want a record of your conversations. The best record is a letter to them or from them.

  8. Bronte

    Bronte Frequent Poster

    Why did you change the day of the repayment?

    How much do you owe, with what interest rate and what term? Have a look at your last statement and use a mortgage calculator to see where the bank made an error.
  9. ConfusedPunter

    ConfusedPunter New Member

    Thanks again for the advice.

    I am expecting a call back today, and will write to them immediately subsequent to that, per Brendan's advice above, reflecting exactly what was said on the phone (Let's just say my note taking of the telephone conversations is flawless!).

    Bronte, I'm not going to give specific details of amounts here. Per your suggestion, I will use the balance on the last statement and the mortgage calculator to figure out the correct repayment over the remainder of the term, although I suspect all that will tell me is that the bank's new calculation is correct. It won't tell me where it went wrong in the past (I suspect it was when we made a mid-term change, possibly when we went to a tracker). That would be a far more long winded exercise, trawling through past statements.