The above image shows an example of a Loose Leaf ledger sheet used to record the transactions on a mortgage (number 27013) granted in 1952 to a depositor at Yardley branch - the depositor's Savings Account number (YL 23881) being annotated on the ledger sheet. The ledger sheets measured approximately 12½" by 10" and were bound into a separate binder (at the branch) reserved for House Purchase accounts that was similar to those used for Savings Accounts. Unlike Savings Accounts, where the account numbers commenced at '1' for each branch, mortgages were numbered on a Bank wide basis, so that this account was the 27,013th mortgage granted by the Bank.

 

The ledger sheet shows that this mortgagor was granted an advance of £1,200 on August 14th 1952. The advance is to be repayable over 20 years and the rate of interest charged was 4%. The mortgagor has chosen to have an 'Equated' advance whereby the amount of interest to be charged is calculated annually on the outstanding balance at each March 31st. An initial interest charge of £30. 4s. 11d. has been added to the £1,200 advanced to cover the period August 14th 1952 to March 31st 1953.

 

'Equated' mortgages derived their name from the fact that the mortgagor was required to pay an equal amount each month - in this case that amount was £7. 7s. 2d. It is this amount that is deducted each month in the 'Balance as per Mortgage' column to show the balance that is due to be outstanding as per the mortgage agreement. The balance 'due to be outstanding' is increased each March 31st by the annual interest charge, but the monthly payment due of £7. 7s. 2d. remains unchanged for the subsequent year. The amount of the 'Equated Monthly Instalment' was calculated by the centralised House Purchase Department by reference to a set of tables.

 

With the loan commencing on August 14th, the mortgagor has until September 14th to make his first monthly repayment, and makes a payment of £10 on September 12th, having chosen to repay a sum in excess of the minimum requirement of £7. 7s. 2d. This repayment reduces the balance owing to £1,220. 4s. 11d. and it is this amount that is carried down to the next line as 'Balance Brought Forward'. By the time that the record of transactions reaches the bottom line of the ledger sheet, the balance outstanding is £1,116. 8s. 11d. compared with a 'Balance as per Mortgage' amount of £1,136. 19s. 11d.

 

The same design of ledger sheet was also used for 'Reducing' mortgages (see example of Ledger Sheet below). The basis of this type of advance was the calculation of interest monthly, resulting in the mortgagor getting instant benefit for any repayments made in excess of the minimum required. The disadvantage of a 'Reducing' mortgage was a higher initial monthly repayment (compared with an 'Equated' mortgage), but the Minimum Monthly Instalment gradually reduced over the life of the loan.

 

In the case of £1,200 borrowed over 20 years at 4%, the comparison of the two methods is as follows, assuming no advance payments are made:

 

Equated Mortgage: 240 monthly payments of £7. 7s. 2d. results in total repayment of £1,766 (£1,200 capital plus £566 interest). This method is based on a fixed repayment representing principal and interest that applies throughout the full period of the loan;

 

Reducing Mortgage: 240 monthly payments reducing from £9 per month to £5 per month, a total of £1,682 (£1,200 capital plus £482 interest). This method is based on a fixed £5 monthly capital repayment, plus a reducing monthly interest charge.

 

The other columns on the ledger sheet were utilised as follows:

 

Insurance: the amount paid by the Bank for Fire (etc) Insurance of the mortgaged property and subsequently debited to the borrower's account;

 

Arrears: the amount by which the 'Balance Carried Forward' exceeds the 'Balance as per Mortgage';

 

Tax Return: the amount reported to the Inland Revenue, normally allowable as a tax deduction.

This example of a Ledger Sheet for a Reducing Mortgage relates to a loan of £600 payable over 20 years at a rate of interest of 4%. As with the example of an Equated Mortgage (above) the rate of interest was fixed at the rate applicable for new loans at the date the loan was granted. This system of fixed rates applied until 1971, when the policy was changed. The loan was granted on April 13th 1953, but this Ledger Sheet covers the period of the loan from October 1956 to June 1958. The Mortgagor was a Depositor at Small Heath branch - Account Number C2520.

 

The Ledger Sheet commences on October 13th 1956 with the balance outstanding on the loan being £490. 10. 0d. With the 13th of the month being the anniversary of the loan, interest of £1. 12. 9d. is added. This amount being calculated as £490. 10. 0d. @ 4% for 1 month. This gives a new balance outstanding of £492. 2. 9d. The Mortgagor has until November 13th 1956 to pay the Minimum Monthly Instalment of £2. 10. 0d. plus the current month's interest. On November 9th 1956, this amount (£4. 2. 9d.) is paid, reducing the balance outstanding to £488. This amount compares favourably with the 'Balance as per Mortgage' (the balance due per the loan agreement) of £492. 10. 0d.

 

Each month, the Mortgagor has chosen to pay just the minimum sum required by the agreement. This option means that no advantage has been taken of the opportunity to obtain the immediate benefit of a reduced interest charge resulting from a higher repayment. Most months, the Mortgagor makes the repayment just before the due date. In February 1958, the repayment is subsequent to the interest charge being applied on February 13th. This results in the amount of 9/10d. being shown in the 'Arrears' column.

 

The final column of the Ledger Sheet ('Tax Return') accumulates the amount of interest charged, to produce an annual figure to be returned to the Inland Revenue.

 

The 'stars' rubber stamped against the account balance at each March 31st indicate that the account balance has been agreed by the Auditors with the extracted list of all account balances prepared by the Bank's staff in accordance with the Bank's Regulations - Rule 14 of the Regulations requiring that each branch had a list of all of its accounts (listed by Account Number and Balance) available for viewing by depositors.

 

The reverse side of the Ledger Sheet (below) has simpler headings above the ledger columns.