Remortgaging from IF to First Direct shortfall

lisyloo

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?

If First Direct overpay IF just to satisfy the incorrect redepmption statement then it's IF that have been overpaid and IF owe you the money not FD.

I haven't had much experience of this, but my general experience is that no-one is in a real rush to give you a refund. The refund depts tend to work a lot slower than the ones that take incoming payments.
You should get it back promptly but if you really are struggling to find the money, then why not wait a few days for the new redemption statement.

How much is the difference?
For a 2% rate difference then you are talking about £5 per day, so it won't cost a fortune to wait a few days.

scarlet74

Thanks again, Lisloo.

I rang them earlier and asked them to send the new quote, which seems simpler all round. The new rate will be base rate + .79% and the old one is 6.5 or 5% - depending on when they were thinking of passing on the last rate cut! It's not so bad, I suppose - better than waiting chasing a £600 refund 3 weeks before Christmas...!

PeteHi

scarlet74 wrote: »

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?

yeah it worked out alright, infact it was a nice surprise! (My head was that scrambled with remortgaging I didnt know if I was coming or going with it!)

One thing I will warn you with FD is that they dont really seem to know what they are doing and in my experience you do have to keep an eye on them. We still have a problem with being overcharged by them (5 months on!)
(Theres times ive called them and theres only one girl in the dept and she didnt have a clue - even tried convincing me that my fixed repayments being higher every month was a result of offsetting, and not because they had made an error and had us on a higher rate than the one we signed up for :rotfl: ).

5 months on they are still overcharging us (by anythning from £20 to £100 a month - Even on todays repayment it was £35!) but they always reimburse us. Ive been promised it will be alright from next month onwards, I wont hold my breath.

PeteHi

scarlet74 wrote: »

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?

In our case, yes we paid a months mortgage to IF and to FD (for the same month, ouch!) IF reimbursed us most of theirs.

lisyloo

The new rate will be base rate + .79%

I expect rates to drop to 2% on Thursday but I think you are right waiting for a new statement.
You don't want the stress of your cheque lost in the Xmas post.
It'll be going out a the absolute worst time of year in the post.

scarlet74

Thanks to all of you who have posted on this thread - and sorry to bump it up again!

I decided to request a new redemption figure, which has obviously delayed the transfer date. I'm not yet sure on what date the transfer actually went through, although I'm about to phone and ask.

Before I do, I was wondering whether what the implications might be of us changing the payment date to coincide with the transfer date? For example, we are currently set up to make payments on the 2nd of each month, but if the mortgage transferred on say the 5th, would it be a good idea to arrange payments for the 5th or 6th - or wouldn't it really make any difference? It just seems neater to me, but I'm not sure whether I would be slightly better or worse off as far as interest goes - and whether an earlier or later date would work in our favour?

Cheers everyone!

straddie

The only real effect of your payment date is on your cashflow - you won't pay any more or less by changing it, you'll pay interest for each day that you have a mortgage with them. The only impact on you is when they take your money and how that fits in with your personal finances.

FD charge interest 3 weeks in arrears - they need to in order to give their systems time to calculate what you owe (due to the offsetting it's impossible to forecast this in advance) and then give you sufficient notification before taking payment from you.

So whenever your transfer goes through, you will not pay them anything for at least 3 weeks. Depending on the payment date you request, it could be longer than that - we recently remortgaged to them on 3rd November with a requested payment date of the 15th of the month. Because 15th Nov was less than 3 weeks away our first payment could not be in November so will be the 15th of December - so we've been with them for 5 weeks now and still not paid them a penny!

Whilst it feels like we've had a free month, in reality of course we haven't; the downside to this approach is that you are always 'behind' in your interest payments, so whenever you come to redeem your mortgage you will have an additional 3 weeks interest to pay (effectively what we would have paid in November), something that obviously needs factoring into your budgeting at the time.

scarlet74

Thanks Straddie - very interesting! I vaguely remeber them saying something about how they had to give me 21 days notice of whatever the payment would be.

In your case, will your first payment be a "normal" monthly payment, without the "extra" 3 weeks? I suppose with the offsetting and overpayment options, some people's payments would be completely different each month - although if we were unlikely to use either, would that mean our monthly payments should always be the same (apart from when the rate changes)?

Cheers!

straddie

Our first payment is actually less than I was initially expecting considering how long the gap's been since we last paid anything - we are basically paying for the 3 weeks interest from 3rd to 24th November (the 24th is when our interest is calculated - 3 weeks before our payment date). So that's not a full month. In our January payment we will pay for the interest accrued between 24th Nov and 24th Dec and from this point onwards each monthly payment will cover a whole month and hence be "normal".

The extra three weeks interest will only be paid as and when we come to redeem - if, for example, we wanted to leave on the 1st Feb, our redemption figure would include interest from 24th Dec - 24th Jan (our regular payment, ordinarily due on the 15th Feb), plus the interest from 25th - 31st Jan. So in a reverse to our December payment we would be paying more than a "normal" monthly payment, and what's more this would come only a couple of weeks after our previous payment on the 15th Jan. That period from 24th Dec - 15th Jan is effectively those "extra" three weeks that we will feel like we've paid for twice.... hope that makes sense! Basically it all evens itself out eventually, just make sure you don't forget you'll have the larger payment to come!

If you had nothing in your linked accounts and made no overpayments, your payments would be identical to a regular repayment mortgage (ie they will reduce slowly over time as you eat into the capital, assuming you don't just pay the interest). In reality, unless you were chucking potloads of cash at the mortgage, or borrowing back chunks of it, interest payments aren't likely to vary wildly, they'll just come down more quickly the more money you have in your various accounts (including overpayments).