Marine Mortgage Issue

Hi again,

I think Obs is right - your cash position is unaffected. if their error is as you state your final payment date will be later than BoS envisaged / advised until the error was identified now the correct interest is applied to the mortgage the term will lengthen accordingly. Whatever, what you have paid would have been the exactly the same date as payments remain static whilst term is variable - this is contra to say home purchase where on variable rate loans the payment alter to keep the term as on the outset, ie 25 year home mortgage concludes in 25yrs time
 
Yep, agree with others, if it's a fixed monthly amount, and only the end date changes, then you have not had a change of position, you would have paid exactly the same amount if they had got it right. You could argue you entered into other comittments on the expectation that your marine mortgage would end earlier than it now will, but that's a much weaker case, and I wouldn't go to court on the back of it.
 
Thanks again for the informative information.

The detail you outline Obs is what I have requested just to satisfy myself they have not administratively 'cocked up' the interest calculations!

I will await the information and post again if further assistance is required.

Thanks again all
 
I ve sent you a PM.. I'm a bit worried how after 4 years your mortgage can be higher now than at the start.
I gave you a back of a fag-packet calculation(with some assumptions)... if its way off that, something else isnt right...but understand that you may wish to keep personal finances private...
 
gjgm said:
I ve sent you a PM.. I'm a bit worried how after 4 years your mortgage can be higher now than at the start.
I gave you a back of a fag-packet calculation(with some assumptions)... if its way off that, something else isnt right...but understand that you may wish to keep personal finances private...
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Most probably because they've calculated interest on the notional lost interest. I'm no accountant but technically they've lent the lost interest to pks1702's account and therefore, doubtless, their 'puter system will think it needs to charge interest on this amount. Obviously, pks1702 should resist this fiercely. There's no way he should owe more than he originally borrowed if he's paid the correct monthly payment.
One interesting thought occurs to me. If pks1702 had sold his boat during the period that the capital owing was being underestimated and the mortgage co had discharged his mortgage, what would have been the mortgage co's position then? My guess is that this was not an isolated error and there may be many mortgage holders who sold their boat and may have benefited from this error. It's no wonder BoS went bust
 
The opposite happened to me last year!

After I had sold the last boat and cleared the mortgage I got a letter saying they had miscalculated the Interest and would I ring them to discuss. Expecting to owe them money I called and found out they had charged me too much. 3 weeks later got a fat cheque through the post.

They were very appologetic and it was clear that they were doing a clean up excercise at the time and I was one of many.

Just keep talking to them and ensure you are not paying interest on interest!

Paul
 
admillington said:
The interesting part is that FHBR have dropped from 5% five years ago to 1.5% now so I am surprised you still owe more than the orginal amount.
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Good point. I may be wrong but I think FHBR has only fallen appreciably in the last few months (certainly it was slower to fall than bank rate) so the fall would not have had a large effect on the mortgage balance
 
FHBR history is here.

I've just knocked up a simple spreadsheet that shows that the principal balance on a £10,000 loan taken 1/7/05 repayable by 120 equal monthly payments at FHBR + 2% and assumed FHBR of 5% (so monthly payment of £116.11) would be £6,929.29 on 1/7/09. If interest had been charged (incorrectly) at FHBR + 0.2%, the principal balance on the same date would appear to be £6,237.52 - the "error" is ~11% of the incorrect loan balance.

"Interest on interest" doesn't (or shouldn't) come into it - all that's necessary is to recalculate the amortisation of the loan at the correct rate. There is no way that the loan balance now can be more than the original loan amount, unless there's some facts missing.

If you want to pm me an email address, I'll send you the spreadsheet.
 
For info, the OP has sent me actual data by pm and his lender certainly appears to have made a complete cods of correcting the original error. This is the spreadsheet (not the OP's actual details) if anyone wants to see how the calculations should be done. The OP's loan has actually been running for 37 months so the results in the attached file are different to the ones I posted above.
attachment.php
 
cant open the doc to check your sheet, but I think I know what BoS have done wrong,and have discussed with OP direct,
 
Also can't open your file. However have done my own sums and if the monthly repayments were based on +.2% they would be approximately 8% higher to repay in the same 10 years. If they were not changed the period of repayment would be about 15 months longer. The %age difference in the outstanding capital balance grows each year because less capital is being paid off each year.

I did my sums on an annual basis and assumed a constant base rate, but as I expect your detailed sums show it gets more complicated if the rate changes in a year and that is passed on immediately so reducing the total interest charge for a year.

If the bank is wrong it is not the first time as I had a long run in with A&L over the algorithm they used for calculating payments on interest only mortgage which did indeed show payments actually going up when rates went down! Never did get them to admit they were wrong, but they did waive all charges when I moved my quite substantial mortgage elsewhere!
 
Hi,let me make the following points
1.They Profess to be the Professionals.
2.They have a duty of care to you,which means they should opperate your account in a professional manner.
3.You unless in a similar profession are not expected to be familar with the behind the scenes running of the account.
4 the advice to get a detailed statement showing how they arrived at the final figures is sound.
5.Put everything in writing and keep a copy incase you need to go further.
6.Check that the original payment was the correct amount to clear the loan in full given the rate and term quoted.If not seek compensation.

The key thing here is how the interest is calculated an applied.If it is caculated monthly and added to the balance then this could account for the increase,however if rates have fallen then it should be less.Futhermore had you recieved the correct statments you might have sought to increase your payments or make additional lump sums.There error denied you the oppertunity to exercise this option.
Good Luck.
 
Thanks to all who posted views and advice much appreciated.

Ain't forums great.......

A recorded deliver letter winging its way to the Senior Manager Marine Finance at BOS.

They not surprisingly appear in a shambolic state with contact numbers unanswered. I had to contact BOS head office who also seemed unsure which number to give me so gave me three!!
 
Its been an interesting Thread.

What is a shame is that BoS ,dispite this error discussed at length here, had a good reputation and added something important to leisure boat industry. If you need finance now the options are further limited which is bad for punters at a time when some serious competition would be useful.
 
I'm back quicker than I anticipated..... the recorded delivery letter left last night, I have just had a call from BOS I guess sending it to the head of Marine Mortgages helped (he must clearly be an endangered species)

They admit they have got the additional interest calculation wrong even though on the phone the other day they were adamant the calculations were correct but could not tell me how they arrived at the figure.

My thanks to all here but particularly Observer & gjgm for their fog clearing PM's

Is it any wonder banks are in the mess they are they clearly can't do maths!

The amount of additional interest they now calculate I owe over the life of the loan due to their original error is only around 25% of what they originally confirmed.

As they can't be trusted I have asked for the calculations and will check their homework!!

Again many thanks all.
 
Tidnock said:
Have you thought about contacting the Financial Ombudsman Service
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Not until I gained a response but I did make it clear in my letter that unless there was a satisfactory resolution I would. Whether there will be rather depends on the workings I get back from them which they do sound decidedly reluctant to send.

Surely could not make a third mistake could they......
 
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