Scenario

 

Customer took out a repayment mortgage for £52,000 in 1997 on the standard variable rate for a term of 20 years but when checking her statement in April 2009 the term being used was 25 years. After further investigation it was established that the customer was put onto the wrong term.

 

Lender	Midland (HSBC)
Mortgage	£52,000
Start Date	11th April 1997
First Payment	1st May 1997
End Date	1st May 2010
In MIRAS	Yes
Term	25 years            - applied
Term	20 years            - should have been used

 

No adjustments required

 

Select the lender interest rate for the ‘HSBC’, interest rate of ‘HSBC_50K+ Standard Variable Rate’ and select repayment for both the actual (A) and notional (B) calculation types, entering a term of 25 years for the actual calculation (A) and a term of 20 years for the notional calculation (B).

 

Comparison Screen

 

 

Observations

 

1.         The payments are higher, as expected.

 

2.         Balance is lower, as expected.

 

3.         Redress ignores the extra payments the customer would have made.

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