Question on mortgage charge

M

micheller

Registered User
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350
Hi All,

We have a normal mortgage for a self build of 210K. Normal as in repayments are based on capital+interest. We drew down 40K in december and start repayments at the end of Jan on that amount.

However, we got a letter stating the terms and tranche payment and it said an interest charge of 1500 was due to 31Dec06.
What is this charge? Any ideas anyone? I'm at a loss!
 
Yup- they said it was a yearly interest charge....seems to be the interest due on the 40K which is fair enough.But the letter is very badly worded. Don't have it in front of me but it read like 1500 was due to be paid immediately.

We're currently waiting for a further and better clarification....
 
micheller said:
Yup- they said it was a yearly interest charge....seems to be the interest due on the 40K which is fair enough.
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Are you sure? €1.5K annual interest on €40K would suggest a mortgage interest rate of c. 3.75% which seems very low!
But the letter is very badly worded. Don't have it in front of me but it read like 1500 was due to be paid immediately.
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It might help if you could post the precise wording of the letter.
 
Yes- it's a new mortgage rate so would be slightly lower than normal.
Will post later on the exact wording if I get a chance.

Thanks :)
 
It's variable so has changed twice now...was around 3.8% last year alright but rate quoted in the current letter was raised to 4.1% (I assume after the last rate hike)...
 
Wording was "interest charge to 31st dec is 1575".
Waiting on branch to clarify further.
 
Sounds odd alright. Looks like that amount would be the annual amount charged on the €40K and not what you actually paid in the year (i.e. c 1/12th of the annual amount presumably). Who is the lender in case anybody else is familiar with quirks in that lender's statements?
 
Thanks Clubman-it's AIB, we've called today and asked them to advise asap on what exactly it is. Maybe I'm just talking to the wrong people in there but I'm not finding them great service-wise.

It did look odd especially as the letter was dated 28Dec- and interest due to 31st Dec is 1500???? For year 2006 shouldn't it only be 1/12 of that? Does this in effect look like an overcharge on the mortgage interest for 06?
 
Hi,
You should also check what you agreed to in terms of start date of repayment - it this was Jan then I don't see why they are charging you separately for dec. It definitely looks wrong the 1500Euro.
A visit I think in person would be wise - if not always keep the persons name from telephone conversations.
 
Interesting brk- thanks for that. The first payment is due end January.
We have a contact in our local branch who's looking at it for us.
I just find these things seem to take days to get a response and there have been two times now where the wording of litreature read really weirdly causing confusion. Ho hum, I await Monday morning....
 
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