Query re redemption with Northern Rock and 1st months interest with Nationwide

looster

Hi we completed on a Nationwide mortgage last week, redeeming our Northern Rock mortgage. The fix on Northern Rock ended on 1 Feb 09. I've got a few questions - I simply don't understand the completion monies/interest payments etc and can't speak to Northern Rock or the Conveyancers who dealt with this now as their office is closed.

1. I received a letter from Nationwide today confirming the 1st months payment payable 5 May. It includes the regular monthly payment (presumably for the month of May?) and an amount for 'interest for month of completion' which is about 3/4 of that. I presumed that this equated to the interest payable since drawdown to the end of April? (we completed on 9 April). However, when I phoned to confirm this - the adviser said that the money had been advanced on 7 April and interest was payable from that date. But our instructions to Nationwide's conveyancers were to complete on 9 April and I know that this was the date when we completed (and repaid Northern Rock) as the conveyancers phoned to confirm. So presumably for 2 days we paid interest to both mortgage lenders - is this correct? Does this mean LMS (the conveyancers) held that large sum of money in their account for two days and presumably earnt interest on it? Is this allowed/standard?

2. The second query relates to the fact we appear to have paid April's interest twice and that our redemption figure from Northern Rock is higher than we anticipated.

We paid our regular monthly direct debit for April's interest to Northern Rock on 1st April (presumably this is interest paid in advance for the month of April). But we are also being charged from 7 April to end of April by by Nationwide.

We just received the completion statement from the conveyancer but do not have a copy of Northern Rock's redemption statement. The completion statement has a redemption figure that is greater than our mortgage balance. I expected it to be £250 higher - being the discharge of mortgage fee referred to in para 10 of our offer doc from Northern Rock. However, this is just over £1000 higher. I have checked our offer doc and our KFI and there is no mention of Help with Costs charge that I have sometimes seen mentioned on here - so I don't think that the extra £750 relates to that. Could it be that when Northern Rock prepared the redemption figure, they had not yet received the direct debit monies from 1st April and so the extra £750 charged as part of redemption is interest - meaning Northern Rock need to repay us our entire payment taken by direct debit on 1 April?

I am hoping someone might understand what has happened and be able to explain this to me - otherwise I am looking at a sleepless night ahead whilst I worry about where to find nearly an entire extra month's money!

Many thanks in advance

Scaredy_Cat_3

It may help to understand the way redemption figures are calculated. They will start with the year end balance (shown on your annual mortgage statement), then add on all the interest up to the anticipated redemption date, add on any fees and charges, and then deduct all payments received.

If the redemption statement was calculated before your payment was made in April, it will have included all the interest payable up to the redemption date, but will not take account of your payment, because it wouldn't have been received at the point the statement was produced.

So, if the redemption figure was based on you not paying the April payment, then you should get a refund of that amount. You need to check with Northern Rock if this payment was included or not.

looster

Thanks Scaredy Cat - will ring NR tomorrow first thing!

Scaredy_Cat_3

Just being nosey - what did NR say?

looster

The discrepancy between amounts was due to the direct debit monies not being taken into account on redemption - and the money is on its way back, thankfully!

Have just received yesterday a copy of northern rock's redemption statement sent to the conveyancers and the redemption figure quoted by northern rock is less than the redemption figure charged on the completion statement by the Conveyancers - by about £350. So another phone call to the conveyancers tomorrow...

looster

update - £350 discrepancy was due to LMS deciding to send the redemption monies to Northern Rock via snail transfer rather than same day transfer. The same day transfer would have cost us £23. The slow transfer cost us £350 in extra interest. Muppets. Complaint letters duly posted to everybody...