Marine Mortgage Issue

pks1702

pks1702

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Like many we purchased our current boat with a Marine Mortgage via BOS standard set up payments made over a given term which varies in or out dependent on rates; payments remain constant.

Standard terms of 2% over FHBR (Finance house bank rates)

Returning from 2 weeks on the boat yesterday I find I have received a one pager stating that due to an administrative oversight they have been using 0.2% over FHBR and not 2% therefore an additional sum (significant) has been added to our account which now 4 years in takes the amount owed to more than we originally borrowed!

If it were standard bank rates I could look back at these and check the calculations but I have no idea how to check FHBR rates back 4 years to see if the calculations they have made are correct.

The letter was a masterpiece of customer PR written in typical bank fashion and hoping an almost additional 20% added to our account does not cause any 'inconvenience'.

Any thoughts gratefully appreciated.
 
The FHBR can be seen easily - just Google it and you will obtain tables over whatever period you wish.

interesting problem (no pun intended) as the mistake was BoS and assume they have now recalc the loan back to the start date with correct interest. I assume that the loan docs shows the 2% above base and your fixed payments are shown in the agreement?

I think the idea with these marine mortgages is that the amount remains fixed and the term is varied to reflect base rate fluxs. So I cannot see how it will cost you more than what you signed up for orginally.
 
If it's substantial enough to consider a legal fight, then you potentially have a defence of "change of position". If you were not aware that they had made the mistake, and have spent the money believing it to be yours to spend, you have a reasonable prospect of success. Being banks though, they may have this covered in the small print, although i'm still not sure this gets them off the hook.

Assuming they don't, then the key test is knowledge, and the bank would have to demonstrate that you knew you were underpaying, or that you suspected it and turned a blind eye. Given that the interbank rate is not widely reported or known by the general public I think this would be an uphill struggle for them. That's why I think it may be worth pursuing for you.

I'm not a solicitor though, so I suggest you chat it through with someone that is
 
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You have all aspects correct MJF all shown in the documents.

I am struggling to get my head around how 4 years in the amount I owe is now more than I orriginally borrowed however. As no calculations were shown in the correspondence as it was an almost standard one page letter it is difficult to get a handle on. The person at BOS I spoke to this morning could not find any details on us ever having a Marine Mortgage! Priceless aren't they.

Thanks for the info on FHBR I will go take a look.
 
pks1702 said:
You have all aspects correct MJF all shown in the documents.

I am struggling to get my head around how 4 years in the amount I owe is now more than I orriginally borrowed however. As no calculations were shown in the correspondence as it was an almost standard one page letter it is difficult to get a handle on. The person at BOS I spoke to this morning could not find any details on us ever having a Marine Mortgage! Priceless aren't they.

Thanks for the info on FHBR I will go take a look.
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Can only assume the amount you have been paying per month is less than the interest charged thus you owe more than you started with.
 
The difference in rates is 180 basis points. So the difference between what you have paid and what you allegedly should have paid is 1.8% on each payment...I think.
 
this wouldnt be the BoS that announced its pulling out of marine mortgages for new business, would it?
 
FHBR isnt base rate as in BankofEngland base rate, so its not a rate anyone can expect to "know".
Still, presumably when you took the mortgage out, you had a pretty good feel for the monthly payment, and that wasnt what was being debited? I would agree that subsequent to new FHBR fixings, you might not have known what the payment really should have been.
I'd wonder if its just you, then you might have a fair case; threaten them with the Ombudsman or something! But if its all their clients.. oops !
 
The First Thing to do is ask for a detailed breakdown of the new calculation. Then compare it to your statements. I would also immediately complain and let them know you do not accept this. Well worth arguing!

Paul
 
Nautorius said:
The First Thing to do is ask for a detailed breakdown of the new calculation. Then compare it to your statements. I would also immediately complain and let them know you do not accept this. Well worth arguing!

Paul
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I agree, but bear in mind that you do not want to give them cause to recall the loan (lots of small print that doesn't always do what it says on the tin :confused:) especially if they are exiting the market, so in the interim I would suggest meeting their revised payments - even if you tell them you are only doing so until the position has been clarified.

My gut feeling is that worth arguing / making 'em work for their money - but at the end of the day you'll probably have to suck it up, but if the new payments are a problem you could get them to agree to extend the loan period.
 
Thanks all for your input.

My first port of call was to ask for a full breakdown of their calculations but as indicated they can't find my account on their system at present... still waiting for a call back.

The payments have not changed and are still as per the agreement they 'hope' that the mortgage should be paid within the original term.

The issue is that they claim the amount they charge in interest each month was incorrect 0.2% over FHBR as opposed to 2% as per agreement. Therefore the 'lump' that was added to my account is presumably the difference but I won't know how they have arrived at this figure without a breakdown of their calculations. I can only verify their calculations by knowing FHBR for each of the last 50 payments I have made and calculating the difference on the balance owed at that time.

I would prefer to let them tell me how they have arrived at the figure added to my account first.

The purpose of the post was just in cases anyone else had been through a similar scenario or experience of how I stand.

Thanks again
 
make sure you dont pay interest on the interest they forgot to collect...so when calculating, make sure that any underpayment,say 4 years ago, becomes a principal amount only in July 2009, not July 2005.
 
If you have been paying the 'agreed' amount in your agreement document then over the past 50 monthly payments you must owe less now than the loan as rates have fallen considerably certainly in 2009.

If they cannot find your account deatil I would continue remitting the same sum each month until they come up with a proper statement of your account with interest debits and your (same - I assume????) payments each month as credits. I am surprised you have not got regular statements - certainly on an annual basis; this would immediate show a problem if the amount due increased.

There is something wrong here - quite opposed to the FHBR +0.2% iso 2%
 
I get a statement each month detailing the payments made and interest deducted. As I have not (perhaps I should have) checked the interest deducted and calculated this against FHBR + 2.0% on a monthly basis I assumed (perhaps wrongly) that the amount of interest deducted was correct. This saw the loan diminishing steadily from the original amount borrowed until the letter recived yesterday which shows me owing more than I originally borrowed.

Payments have always been the same amount and are scheduled to remain the same.

I can't really shed further light until someone from BOS contacts me back (three calls made today) but will keep you posted.

Thanks GJGM a very useful thought.
 
bos

quite agree with mjf the fhbr changes on the 1st day of each month and we were withbos for years and had a statement every 6 months barclays do once a year but the rate has come down quite alot as the bank rate
 
I get monthly statements showing balance / payment made / and interest added from bank of scotland , but , they never show the rate applied so i phone every 3 or 4 months and someone tells me what have been applied . Unless your monthly payment has been very small i cant understand how you can owe more than you started with !.
 
Yep - i think the ball is in BoS court now as long as you have made / continue to pay the 'agreed' monthly sum. If nothing heard by say the end of the week I would write to them (recorded) and express dissatifaction at the letter (you have) and lack of support / follow up on the alleged shortfall; holding them liable for past and future costs / out of pocket expenses caused by the negligent bookkeeping.

Good luck.
 
AIUI, you are on a level payment repayment plan so that you pay the same amount every month and the term of the loan extends or shortens depending on the interest rate applied.

BOS has cocked up the margin applied so that instead of adding interest at FHBR (say 4%) + 2% margin (so 6% all in) they have been adding interest at 4% + 0.2% (4.2% all in). If you have been paying the same amount, that means that your loan principal balance, before adjusting for the correct margin, is lower than it would have been if interest had been properly applied. If they retrospectively apply interest at the correct rate, the loan principal balance will be higher than the "incorrect" balance - I don't quite see how it can be more than the original principal amount unless your monthly payment is at an "interest only" level.

The fact is that you are (in cash terms) in EXACTLY the same position as you would have been if interest had been charged correctly. You may have been misled by statements showing a lower balance but that was an error. You have to ask yourself: if the situation was reversed, would you expect them to credit the 'overcharged' interest. If (as I expect is the case) the answer is yes, it has to work both ways.
 
I can accept mistakes are made we are all fallible and I am not expecting them to credit me anything due to an administrative 'cock up' but it would have been professional surely to enclose details of their calculations so that as a customer I can be assured that what they have added to my account is correct. As indicated I got just a one page 'standard' letter with an amount (in excess of 10k) that would be added to my account. The account is a repayment not interest only,

I agree with most of your post Observer except there is no way of me knowing I am in the same cash position without details of how they have worked this out or what 'lost' interest rates they have applied to the balance of the loan I have.

Thanks again mjf
 
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pks1702 said:
I can accept mistakes are made we are all fallible and I am not expecting them to credit me anything due to an administrative 'cock up' but it would have been professional surely to enclose details of their calculations so that as a customer I can be assured that what they have added to my account is correct. As indicated I got just a one page 'standard' letter with an amount (in excess of 10k) that would be added to my account. The account is a repayment not interest only,

I agree with most of your post Observer except there is no way of me knowing I am in the same cash position without details of how they have worked this out or what 'lost' interest rates they have applied to the balance of the loan I have.

Thanks again mjf
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You are in the same "cash position" because the interest rate applied (whether correct or incorrect) has made no difference to the payments you have made to date. The issue is how much your loan balance is or should be. I agree that lenders should provide enough info for you to verify their calculations - it is often the case that they don't. However, I think you are perfectly entitled to demand it. You would need to know the interest rate applied for each period, the amount of the loan and the amount of each repayment. If you want some help with the calculations, post again.
 
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