Your repayment amount may have increased / decreased more than you expected because the rate decrease triggers a mortgage recalculation. With a mortgage recalculation, we work out if your monthly repayments are enough to repay the mortgage balance (what you have left to pay off your mortgage less any arrears as arrears must be paid separately) in full, within the remaining mortgage term.
If we work out that your repayments are not enough, we will increase your monthly mortgage repayment so it won’t take you longer to pay off your mortgage than your existing term.
For example, if your mortgage was previously in arrears you will have incurred more interest as your balance will have been higher than expected when compared to an account that did not have arrears. As the balance is now higher than projected at the previous repayment recalculation the new repayment calculated must reflect that higher balance.
If however, you were in arrears at the previous repayment recalculation (rate change, mortgage term change, repayment date change, lump sum repayment, arrears capitalisation) and have now paid the arrears and have continued paying extra meaning that you have paid more than expected since the last repayment recalculation your repayment may decrease by a greater amount as the balance remaining will now be now be lower than expected.