Remortgaging from IF to First Direct shortfall

scarlet74

Morning!

Sorry - another remortgage question for anyone in the know, I'm afraid...

We were lucky enough to get accepted for the First Direct .79% tracker after remortgaging from Intelligent Finance (never actually thought it would happen!). We were hoping it would all have gone through by 1 December, as this is when we make our payments to IF, but it didn't quite happen and we ended up making our last payment to them yesterday.

We are now being held up as First Direct say there is a shortfall with the figure IF have quoted for their redemption figure. The mortgage we have requested is £94,000 but IF say we actually owe £94,605. This includes the £140 for leaving them (so far so good) but doesn't include our latest payment of £690. In other words, I think our true redemption figure should be about £93,915, which would be fine for the remortgage.

This is holding up the transfer of the mortgage, so each day we are paying interest to IF as we are still with them. First Direct say we could either pay the shortfall into our account, and IF should then refund the overpayment (but we can't afford that at the best of times, and especially not in December). Another option would be to request the redemption figure from IF again, which would delay the transfer by a few more days, during which we would continue to pay IF interest.

Have IF messed us around, or is this normal? I know that on our annual statement, the interest is added on to the balance on the 1st of the month before our payment comes off. If we are still paying interest to IF in the meantime, should we get this refunded, or does anyone know if First Direct would take it off our first payment?

Sorry to ramble on! I'm going to call them both this morning, but I wanted to see if anyone else has had similar experiences? For all I know, it might be the norm for remortgages, but it's our first time :rolleyes:

lisyloo

Have IF messed us around, or is this normal?

Payments don't happen instantly.
It sounds quite normal to me.

If we are still paying interest to IF in the meantime, should we get this refunded

Whilst you have a loan with the you have to pay them interest.
I don't think a mistake has happened here.
When your redemption statement was requested the payment ahd not gone through so it was correct.

or does anyone know if First Direct would take it off our first payment?

You woh't have to pay First Direct any interest until the mortgage has gone through.
They charge by the day not the month, so it it goes through on 3rd December (for example) you would not pay for 1st and 2nd only 3rd - 31st.
It might be frustrating if the new rate is lower, but you will not be paying twice if that's what you're worried about. Both lenders will calculate it on a daily basis.

but I wanted to see if anyone else has had similar experiences?

Oh yes, this is entirely normal and usualyl much worse unfortunately.

Although it's frustrating, it probably won't cost much more.
The only thing you could have done with hindsight is to request a little bit more.
I recently remortgaged for £164K but I asked for £165K so that I didn't have this problem.

blued

The same thing happened to me. Luckliy I had the cash so paid the difference with my debit card. If you dont want to request another statement do you have a credit card you could put it on and then pay it off when IF refund you? Check that this wont incur any charges obviously. They'll send you a cheque as soon as they have the money from First Direct.

Cant say I agree with adding £1000 to a mortgage to cover this. Thats like having a large product fee added to your mortgage and will obviously add to your interest.

scarlet74

Thanks, Lisyloo!

I didn't mean to sound like a victim or anything, and as you say, in hindsight perhaps we should have asked for a little extra when we remortgaged - but being naive it didn't occur to us at the time! We'll certainly know for next time.

As I understand it, then, we won't end up paying twice (which was my main worry) and the only snag would be that while we are still with IF we'll be paying a slightly higher rate of daily interest - which I can live with.

Cheers!

lisyloo

Cant say I agree with adding £1000 to a mortgage to cover this. Thats like having a large product fee added to your mortgage and will obviously add to your interest.

Incorrect.
I requested £165K to be on the safe side but First direct ONLY paid the redemption figure. I have NOT taken on any extra loan so won't be paying any additional interest.

Obviously if your planning this with a different lender you should check what they do, but FD only pay the redemption figure, not the figure you request.
Other lenders may act differentyly, so I would suggest not making any assumptions about how your lender works as they don't all do the same thing.

PeteHi

exactly the same thing happened to us moving from IF to FD, We didn't 'get the money back' as such, they just charged us a lot less on our 2nd months repayment.

scarlet74

Cheers, Blued!

It really didn't occur to us when we remortgaged that this might happen, but it sounds like it's just the way it works.

I'm still working out which way to go - I could probably just about handle the overpayment for now, but I'm worried that I might end up chasing the refund in a few weeks' time...!

Maybe a phone call is in order.

blued

lisyloo wrote: »

Incorrect.
I requested £165K to be on the safe side but First direct ONLY paid the redemption figure. I have NOT taken on any extra loan so won't be paying any additional interest.

Obviously if your planning this with a different lender you should check what they do, but FD only pay the redemption figure, not the figure you request.
Other lenders may act differentyly, so I would suggest not making any assumptions about how your lender works as they don't all do the same thing.

I didnt realise that some companies worked like that, I'm pretty sure IF dont because when I remortgaged with them I got some 'change'! Makes sense to do this if the lender only pays the redemption.

blued

I doubt you'll have to chase them for a refund but like you say a quick phone call will confirm it.

scarlet74

PeteHi wrote: »

exactly the same thing happened to us moving from IF to FD, We didn't 'get the money back' as such, they just charged us a lot less on our 2nd months repayment.

Morning Pete.

Did that work out alright for you? I'm just wondering whether the amount they took off your next repayment was about the same as you had "overpayed", if that's the right phrase. Probably isn't!

We were meant to switch on the 1st December, and it looks like our first payment to FD will be at the beginning of January. Do you think they would take off the amount we had overpaid to IF in the mortgage redemption, ie a whole month's payment?

payless

most lenders ( the new lender) pays back the "change" - but with most deals it can be repaid as an overpayment afterwards anyway