Lender's £32,000 blunder by Finance News Bulletin

Published: 14/03/07

Supertanker direct Chris Bordas and his wife, Helen, faced £32,000 of unexpected mortgage debt because of a blunder by Nationwide Building SocietyThe problem arose due to quirks in the UK's main building society's computer system, which Nationwide admits could affect other clienteleChris, 49, and Helen, 43, from Broadstairs, Kent, have a Nationwide mortgage which is part interest-only and part repaymentThe interest-only part is left over from previous mortgages with other lenders which were backed by endowment policies

When Chris tried to pay some of the interest-only part of his loan with an donation payout, Nationwide's system ran into problemsThe money was mistakenly removed from the repayment part of the loan, so the couple had salaried almost £2,500 in extra interest on the other part by the occasion the mistake was noticedChris and Helen have a £78,000 mortgage with Nationwide; half of which is on a repayment basis, so the amount owed gradually reduces The other £39,000 is interest-only, so the money owing must be repaid by other income, such as endowment payouts

In June 2005, one of their three endowment policies developed and salaried out £18,000 They took their cheque to the local Nationwide branch to repay some of the interest-only mortgageA few existence later they received a letter from Nationwide asking them to call and confirm that the overpayment had been the profits of a life assurance policy so that the mortgage could be 'adjusted correctly''I phoned and I frequent the request that the money should be used to pay off the interest-only part of the loan,' Chris says

But the money was assigned incorrectly, still send-off a £39,000 interest-only loan due to be paid off in seven years' time The couple's difficulty worsened in June this year when a next endowment matured, disburseing out £14,000 Again they tried to disburse off the interest-only part of their loanThis is Money's tips and advice can help you get the best mortgage, find a dream house or transform your house

read:Helen, a legal clerk, says she became suspicious when they realised their mortgage payments had fallen to now £150 a month Again, Nationwide had paid off the wrong part of the mortgage 'If we had not noticed the mistake it would have left us an unexpected bill of £32,000 to pay at the finish of the word,' says ChrisNationwide has accepted responsibility for the errors and apologised

The money has now been properly deducted from the outstanding mortgage and £2,46883 compensation paid to wrap all the extra interest the pair were charged on the interest-only part of their loanA spokeswoman says: 'Nationwide receives millions of lump sum and overpayments annually, which are handled in agreement with our borrowers' instructions The automated procedure allows for borrower favorite in either reducing the length of the remaining term or monthly payment

'Very occasionally, where there may have been a breakdown in message, problems may arise, but these are investigated on an person basis and the appropriate action will then be taken to rectify the state of affairs We have not handled this case to our customary standards'If you have a mixed or part-and-part mortgage with Nationwide, you need to take a few easy steps to ensure any endowment payouts are repaid correctlyThe system will mechanically assign the cash sum to the repayment part of your loan and reduce your journal repayments

Although this may seem attractive, it will leave you with a large outstanding debt when the mortgage has to be redeemed You require to send any cheques for overpayments with a letter explaining that you desire them to be applied to the interest-only part of your loanConfirm this with the customer services team when you are sent a computer-generated correspondence asking you to do so They can override the computer system and apply the overpayment to the interest-only part of your loan

lastly, check your next mortgage statement to ensure the money has been deducted from the correct partchoose a loan term 12 months (1 day 24 months (2 years) 36 months (3 existence 48 months (4 existence 60 months (5 existence 72 months (6 existence 84 months (7 existence 96 months (8 existence 108 months (9 existence 120 months (10 years)Please select a type of insurance Life insurance house and contents Car Breakdown services physical condition - medical physical condition -

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