Bank Charged too much on mortgage statements

Happiness

Happiness

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Hi Guys, In 2001 I took out a mortgage for 136,000. Like most people, I didn't bother paying attention to the mortgage statements, just quickly threw my eyes over them, if even (I was really busy at work, maintaining a house and rearing my son on my own, and trying to make ends meet. I assumed the banks were getting things right, so just kept paying.

In 2007, I refinanced from one bank to another bank to get money to do renovations. I stayed within budget, and continued to pay the mortgage. I have never missed a mortgage payment, even during the financial crisis, which was horrific and everyone was working for peanuts (well, most of us were). I recently came into some money and wanted to pay a lump sum off the mortgage, which is now 20 years old. The mortgage is 20 years old, 7 years with one bank and 13 years with the second. I was surprised when I looked at my latest 2020 mortgage statement, as it showed that I still owed the same amount I had originally borrowed. I asked both banks to send me mortgage statements so I could review. What I found was shocking.

In 2001, the original bank had noted the original loan of 136,000. However, in 2002, they had added an extra 35,000 to that, and have been charging me on this since then. The second problem is that when the loan transferred to the second bank for the refinancing, the amount repaid to the first bank was 146,000 to redeem the loan (the original loan was 136,000). I was at first surprised about the 10,000 penalty for repaying the mortgage early, but then I realized it wasn't just that 10,000 - there was also 6 years mortgage payments at close to 1,000 per month unaccounted for. This caused me to look at the mortgage statements again until I noticed the error the original bank had made. This means that my mortgage payments, and the interest have been paid on money I never borrowed.

Is there any advice here as to the best way to handle this? There was never a loan taken from the original bank to increase the original mortgage amount, and I seem to have been paying this money back for 20 years, along with interest.

Please advise - any help would be excellent. Thank you.
 
You have a top up of 35K in 2002 which you never received? Start with that one, write to bank saying you note an addition of 35K to mortgage, money you never received or requested. They should have original loan requests etc. And should be able to prove otherwise.

You were paying back I&C at @1K per month so it would be likely that 171K was reduced to 146K after 7 years, but the bank would have recalculated the amount outstanding on the loan to close it so the precise calculations should be available in the file. What did your mortgage statement say was outstanding the month prior to changing lender?

And finally in 2007 you took out a new mortgage of 146K, and after 13 years of payments you have reduced this to 136K? Is the second mortgage payments all in order?

I think you are getting the two mortgages muddled, and you can’t compare your current balance to your original loan amount. Now that you have all the statements just work it through year by year comparing outstanding loan, interest rate and payment.
 
In my experience, most people who think that their mortgage statements are wrong, just don't understand the mortgage statements.

Some of the statements you make, suggest that you don't really understand it.
  1. I didn't bother paying attention to the mortgage statements
  2. I was surprised when I looked at my latest 2020 mortgage statement
  3. the 10,000 penalty for repaying the mortgage early,
Mortgages statements are difficult to understand for most people. When someone goes to the trouble of understanding them, then they tend to look at their statements and would immediately spot:
  1. The addition of €35,000 which had not been drawn down
  2. The fact that the balance was staying the same all the time.
 
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But banks do make mistakes. So it is worth checking.

You switched lender in 2007. Your solicitor guided you through this. You must have known that the balance you were borrowing was €146,000 + whatever you added for renovations. Your solicitor certainly knew. They had to ask the old bank what the balance was. You would have had to sign papers. You would have seen the figure of €146,000. You would have thought: "Hang on a minute, how do I owe more today than I initially borrowed 5 years ago?" You were alert enough to switch lenders, so you would have been alert enough to know the balance.

My guess is that you took out an interest-only mortgage to keep the repayments low. So you have been paying only interest since then, which means that you will owe the full balance when the term is up.

I suspect you are on a cheap tracker and your monthly repayment is very low.

So to sort out the second loan:
1) Which lender is it? I suspect Bank of Scotland Ireland who did full term interest-only cheap tracker mortgages.
2) What is the interest rate today?
3) What is your monthly repayment?
4) How long do you have left?

Have you a copy of your original loan offer or loan agreement? I suspect you will see that it says "interest only".

So it does not appear that the second lender made any mistake.

Brendan
 
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Happiness said:
there was also 6 years mortgage payments at close to 1,000 per month unaccounted for.
Click to expand...

I am not clear on this. Are you saying that you paid €1,000 per month for 6 years to the original lender and they never put them on the bank statements?

That doesn't make much sense. Because, then your statement would just show
1) 2001 - borrowed €136,000
2) 2002 - added €35,000 - so new balance is €171,000
3) Add the interest of about €8,000 a year €48,000 - gives €239,000
4) But the balance transferred was only €136k + €10k

A possible explanation?
I like the IR£ to euro explanation, but the dates are wrong.

Was the original lender Irish Nationwide by any chance?

I never ceased to be surprised by their bank statements. I didn't believe stories people told me, but when I checked the bank statements, the stories were correct. For example, a repayment of €60k was added to the balance, instead of being deducted from it.

If the lender is still in business, and they have made a mistake, they will rectify it, even if it is 13 years old.

Brendan
 
Brendan Burgess said:
A possible explanation?
I like the IR£ to euro explanation, but the dates are wrong.
Click to expand...
Are you sure? The withdrawal of IR cash wasn't until January 2002, so is it possible bank and mortgage statements weren't changed until then either?
 
HFP

You are dead right. I was working on the earlier date but that was only a notional introduction.

Yes, the conversion to euro is the most likely explanation.

Brendan
 
Surely the person borrowing the money knows whether the borrowed pounds or euro, how much was the house, if you have your contract for the purchase/solicitors correspondence it will have the amount paid/borrowed and should state what currency it was.
 
Brendan Burgess said:
I am not clear on this. Are you saying that you paid €1,000 per month for 6 years to the original lender and they never put them on the bank statements?

That doesn't make much sense. Because, then your statement would just show
1) 2001 - borrowed €136,000
2) 2002 - added €35,000 - so new balance is €171,000
3) Add the interest of about €8,000 a year €48,000 - gives €239,000
4) But the balance transferred was only €136k + €10k

A possible explanation?
I like the IR£ to euro explanation, but the dates are wrong.

Was the original lender Irish Nationwide by any chance?

I never ceased to be surprised by their bank statements. I didn't believe stories people told me, but when I checked the bank statements, the stories were correct. For example, a repayment of €60k was added to the balance, instead of being deducted from it.

If the lender is still in business, and they have made a mistake, they will rectify it, even if it is 13 years old.

Brendan
Click to expand...
Thanks Brendan. You are right - it doesn't make sense. We had to make up the difference of the purchase price in cash, as the bank wouldn't lend us the full amount on our salaries. 136,000 was the most they would lend us, so I am surprised at the year end 2001 the balance owing was about 134,000 and on January 1, 2002 the amount owing was 170,000. And you are right about the currency. The euro came in in 1999, and our mortgage was drawndown in 2001, so despite the fact that the bank documents say IRP, the actual currency is euro. I asked the lawyer about this at the time, and he said just to ignore it - although it surprised me at the time that the banks were allowed to draft documents in a currency which effectively, no longer existed.
 
When did the euro become official currency, it was 01-01-2002, so you borrowed IRP and it was then converted to Eur. So whilst EUR existed and rate was fixed you couldn't transact I it, so you had an IEP mortgage paying back pounds, the this pound amount was converted to EUR on the 1st Jan at .787564 which was the conversion rate. Maybe check the 134k to see what it equates to in EUR

From a quick Google

The euro banknotes and coins were introduced in Ireland on 1 January 2002, after a transitional period of three years when the euro was the official currency but only existed as 'book money'. The dual circulation period – when both the Irish pound and the euro had legal tender status – ended on 9 February 2002.
 
The exchange rates were fixed in 99, €1 = €0.787564 (I still know the FX rate based on muscle memory from typing it so often). The punt was still legal tender but from that point you could work out what the Euro value was going to be. Dual pricing followed etc. But the Euro started circulating/legal tender in 2002. Like everything else your mortgage was automatically converted.
 
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