Questions of cash: It pays to keep track of your mortgage payments
Saturday 30 May 2009
Q: We moved house in July last year. Nationwide redeemed our existing tracker mortgage against our wishes.
With difficulty, we had the sum outstanding at redemption 'ported' back onto the same tracker product. Because the original product was redeemed after five years and a new product issued for the remaining 19 and a bit years, we calculate that we will pay extra interest over a 25-year period, as more interest is paid in the early years than the later ones. The Financial Ombudsman Service tells us that as we have a repayment mortgage we should not pay more interest as a result of having the mortgage redeemed and reinstated. But in July 2008 – before the problem arose – the interest rate was 5.29 per cent and the monthly repayment £647.83. In December, the interest rate had fallen to 3.29 per cent and the calculated repayment was £565.77 per month. A 2 per cent interest rate cut should have resulted in monthly repayments falling to about £500 per month. MW, Rawtenstall.
A: Congratulations on keeping a close eye on the mortgage charge calculations. Your assessment is correct. In a statement, Nationwide says: "In line with our usual practice, an early repayment charge and redemption fee were applied on redemption and then refunded once the product was set up again on the new property. Unfortunately there was a delay in porting the tracker product and this was not completed until 8 January 2009. As a result of the delay, [the readers] were overcharged by £539.23 in interest on the tracker part of their mortgage from 31 July 2008 to 7 January 2009. An interest adjustment has now been made to [the] mortgage account and the balance has been reduced by this amount. Furthermore, we have extended the expiry date of [the] tracker rate to 31 August 2009, from March 2009. We calculate the interest lost as a result of a) the delay in refunding the early repayment charge and redemption expenses, and b) paying a higher rate of interest on the tracker part of the mortgage, to be £40.24 and £9.51 respectively. [The readers] have not been financially disadvantaged as a result of redeeming their existing mortgage, which was part way through the initial term of 25 years, and re-setting the new mortgage with a term of 19 years and 7 months." But, adds Nationwide, it has not provided you "with the level of service we would have liked" and it apologises "for the inconvenience and frustration that this has caused". It is offering you compensation of £200.
Q: I bought kitchen units from a local independent company in 2006 – a one-woman outfit who imports products from Portugal. This was completed in December 2006. The last invoice was given to us in December 2006, which I paid. It was clearly understood by both of us that this was the final payment. In March this year I had a letter from her explaining that her accountant had calculated that VAT on the purchase of £493 had not been paid. She admits that she made a mistake in her calculations and failed to include this in her invoice. Do I have to pay this? I had the money to pay it at the time, but our financial circumstances have since changed: my partner has lost his job and my income has fallen badly. We did not realise we had not paid everything. LL, Leighton Buzzard.
A: A supplier has six years (five years in Scotland) in which to invoice for goods supplied – and that includes invoicing to correct an undercharge. The situation might have been different if the bill had stated that this was a 'full and final invoice', but it did not. Nor are you certain that the supplier stated clearly, verbally, that this was a 'final invoice'. This is a genuine error made by the supplier, that you were unaware of. Susan Marks of Citizens Advice says there was "a mistake... which both parties should have realised". She adds: "As it is within the legal time limit, the outstanding amount remains outstanding in order for the contract to be fulfilled on the part of the purchaser. It's inherent when you make a contract that you are going to pay the price agreed, in the same way that you don't expect a trader to come back with a higher price. The trader has been open and honest about the mistake and made a reasonable request." You should now explain to the supplier that your circumstances have changed and that you are not in a position to make an immediate payment in full. You should instead offer staged payments at a rate you can afford. Given the mistake made by the supplier in not billing you properly at the time, she should be accommodating in accepting staged payments. We offered to contact the supplier on your behalf, but you decided – probably correctly – that a friendly approach from yourself would be better.
Q: My wife and I had a 25-year with-profits endowment mortgage with Norwich Union that matured in July last year. I have read that there is a possibility of a windfall for current policyholders. I also understand that this surplus was postponed last year. Do we have a claim on this windfall? SH, Newcastle-upon-Tyne.
A: No. Your funds were held in the Norwich Union Life and Pensions (NULAP) fund. Only investments in specified funds are eligible for the 'reattribution offer'. These are those held within the CGNU Life With-Profits Fund and the Commercial Union Life Assurance Company (CULAC) With-Profits Fund, including the Norwich Union Life (RBS) Ltd (NUL RBS) and Norwich Union International (NUIL) policies. To be eligible, policies must have been in force on 21 November 2006 and still be in force on the day reattribution occurs, which is not likely to be before late this year at the earliest. All eligible policyholders will be contacted in the near future inviting them to vote on whether they wish to receive a 'reattribution payment'.
Questions of Cash cannot give individual advice. But if you have a financial dilemma, we'll do our best to help. Please email us at: firstname.lastname@example.org
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