Has my interest rate and monthly payment changed?
On the 4th August 2016, the Bank of England Base Rate reduced by 0.25%. This was as a result of the Financial Policy Committee reducing the Bank of England Base rate by 0.25%. If you are a customer with a Bank of England Base Rate Tracker mortgage, your interest rate has decreased by 0.25% in line with the Terms & Conditions of your account. We also took the decision to reduce our Standard Variable Rate by 0.25%. Therefore, if you are a customer whose mortgage is on our Standard Variable Rate, your interest rate has reduced by 0.25%.
Our letter confirms your new monthly payment.
When will my interest rate and monthly payment change?
For all of our Bank of England Base Rate customers, the new interest rate was applied by the end of September at the latest. Our Standard Variable rate customers’ interest rate was reduced by the end of October at the latest.
Your new monthly payment will change on the date specified on you letter.
Why did I not get a letter straight after the change in rates?
We wrote to the majority of customers who were affected by the change in both Bank of England Base Rate and the change to our Standard Variable rate in the month following the rate reductions. However, if you did not receive a letter at this time, this is because we needed to conduct some further investigations in order to confirm that your new monthly payment was correct. Please rest assured that although your payment was not changed immediately, the interest charged on the balance of your mortgage was reduced at the same time as other customers’ accounts in line with the Terms and Conditions of your account.
The reason for the small number of delays in changes to customers’ payments was due to projections which showed that their payments were increasing due to the recalculation on the mortgage account, and we wanted to make sure that this was accurate before updating the payment. This period of time has also allowed us to ensure that we have the right support and options in place for those customers who are seeing an increase in their monthly direct debit.
Do I need to do anything now?
If you have been sent a letter, it is important that you make your new monthly payment in full and on time to prevent your account falling into arrears, as this could adversely affect your credit file and could also mean you incur additional fees and charges.
If you pay by Direct Debit your monthly payment will change automatically. We will collect the new monthly payment amount from the date specified in the letter sent to you, so you do not need to take any further action.
Why might my new monthly payment be different to what I expected?
There are a number of important factors that can affect your new monthly payment when an interest rate change occurs, so your new monthly payment amount may differ from your own calculations. In some cases, this may even mean that your monthly payments will increase, despite the reduction in the interest rate that you are paying.
Unless you have recently asked us to recalculate your monthly payment, differences can arise for a number of reasons, for example where you have;
- incurred any additional fees and charges;
- taken a payment holiday;
- paid less than your normal monthly payment for any period of time;
- changed the date on which your monthly payment is collected at any point during the mortgage;
The impact of these differences on your monthly payment may be more pronounced if you only have a short outstanding term remaining on your mortgage or loan.
How can a change in payment date have caused this situation?
If you ask us to change the date of your monthly payment, either at the start or in the middle of your mortgage, the direct debit scheme rules require us to give 14 days’ written notice of this amendment.
If your next payment is within 14 days of your instruction to amend the payment date, then this payment will not be debited from your account. This in effect will mean that you will have made one fewer payment than was projected when your mortgage was set up. The newly recalculated monthly payment will take into account this missed payment, and spread it across the remaining payments left on your mortgage, along with any accrued interest. This can occur when you request a payment date change at any point during your mortgage; even if this request is made before your first monthly repayment.
Can I fix my interest rate or change to another deal?
Yes – customers on our Standard Variable Rate with a balance greater than £25,000 can speak to our mortgage team on 0800 056 0567 to arrange to speak to a mortgage advisor about this. Customers who have been on a Bank of England Base Rate Tracker mortgage for more than 3 months can use our ‘Track and Switch’ facility to secure a different rate if they wish.
What if I am struggling to afford my monthly payments?
If you are worried about making your monthly mortgage payments, you should call us on 0800161 5913 immediately. The sooner you speak to us, the more we can usually do to help. We will always consider your personal circumstances and be fair and considerate at all times.