Endowment Mortgage Q

Have you been paying the mortgage interest by standing order, as opposed to direct debit? Or has the lender recalculated the DD amounts less frequently than there have been changes in the interest rate?

It's possible that for various periods your actual payments have been higher than what -according to the actual interest rate- they should have been, and that these overpayments have resulted in the reduction of the loan balance.

we pay by DD and the payments are revised yearly, to which we adjust the DD accordingly. We assumed these would have taken into account any under or over payments of interest. This is not a recent jump in figures, it has been reducing over the last 15 years. Maybe I am missing something so will call them on Monday.

What do you mean *you* adjust? Surely in the case of DD (as opposed to SO)

Different lenders do different things. Some revise the DD payments as soon as there is any change in rates, and even then the balance doesn't stay constant, with small differences arising from interest being charged on a daily calculation basis, and payment changes not being completely synchronised with rate changes.

Let us know what they say.

sorry, its a standing order and I'll let you know what happens...thanks

That probably explains it. By the way, it's probably a good idea not to reduce your payments when interest rates go down. Keep paying as much as you can afford. That way you won't be relying on the endowment performing to target, and won't be in the shit when there's a whopping shortfall.

yes, its transpires we are paying at 6.5% and having read through my conditions, the only thing I can find ref the rate in respect to the current bank rate is that it will not change above 0.75%. So with this I assume at the next review it should still be above their current posted 4.8%. They do tend to hide the important data away mind....to think the starting rate back in '88 was 12%....wow.

well, well, well, I have reviewed our mortgage paperwork and it transpires the error falls in my lap. In the mid years, some of the monthly payment instructions from our provider had been ignored. Hence for 4 years we overpaid an average of 170 per month. This equates to an overpayment of 8k to date. In my defence I must say I was very busy during those years working both in the UK and USA so omitted to complete the bank notification attachments. Amazing really when one prides oneself on the handing of their household finances. Still its all for the better.

Jolly good. Of course it's what you should have done in the first place.

It is indeed for the better, and so you are wrong to apologise for your mistake. You should not be seeking to mount a defence, you should pat yourself on the back for your unintended astuteness.

:-)