Abbey branch messed up our lump sum payment

familychoice

A few weeks ago we went into the Abbey/Santander to pay a bit off the mortgage. Seemed pretty straightforward, I closed a savings account that the staff never seemed to understand (even though they 'sold' it to me, every time I went in they seemed to have never heard of the type of account I had) and they gave me a cheque which was then used with some other money to pay off some of the mortgage. Easy peasy, and we even had the Branch Manager doing the business.

This morning we had a letter from Santander Head Office, saying that because something or other was not written on the back of the cheque that was sent to them (not our cheques, presumably this was one for the whole sum created by their branch) it was used to pay off a monthly mortgage payment instead, and put through as an overpayment. The following month this was corrected, but to achieve the reduction in our mortgage that we had intended they say we now owe them an additional £128.

No apology, in fact it sounded as if WE we're being told off for making the mistake.

So, simple task of trying to pay off some of our mortgage at our local branch and the Manager cocks it up, head office assumes that instead of paying off a lump sum we're making a 150x monthly overpayment, we get a snotty letter, and we are now £128 out of pocket. Obviously I'll be popping in first thing on Monday but my guess is they won't sort it out, they'll protest that it's 'head office'.

Any links to people I can complain to about this or other advice to avoid paying £128 for someone else's mistake are more than welcome.

Thanks for reading.

ViolaLass

Do you owe the £128 because your next monthly payment was reduced by this amount? If so, then you're not out of pocket.

dzug1

You complain in the first instance to the branch

If you don't get a satisfactory answer you complain to Head Office

If that fails as well you can take it to the Financial Ombudsman http://www.financial-ombudsman.org.uk/consumer/complaints.htm

My guess is the branch will sort it out

Thrugelmir

What's the difference between a monthly overpayment and a lump sum overpayment?

wodgerdodger

The correct wording should be an Overpayment or a Capital Repayment. The former merely means you are in advance of payment, in credit effectively, and the Interest on the outstanding balance is not recalculated until the year end. A Capital Repayment means the total outstanding debt is recalculated immediately and you normally have a choice of either taking future lower payments over the remainng term or alternatively use the repayment to reduce the term and maintain current monthly payment level.

Hope that clarifies it

Thrugelmir

wodgerdodger wrote: »

Hope that clarifies it

Our mortgage interest is calculated monthly and we can overpay without restriction. As we opted to pay by standing order (i.e. fixed monthly amount) then our monthly repayments are never amended. As would be the case if we paid by direct debit.

So all overpayments are used for "capital" reduction. Hence my question.

wodgerdodger

I'm not sure that it makes any difference whether you pay by SO or DD. We have a flexible tracker paid by DD and simply requested lender takes 750 per mth rather than the required 425. This remains in force until and if the due payment goes over 750.
I am overpaying therefore by 325 which reduces the interest charged and effectively the mortgage term but it provides me with the option of drawing back down against the "credit balance" or taking payment holidays until the credit balance is used up.
Rather than saving the 325 in a normal saving account on which tax is payable ( apart from an ISA) i am effectively earning interest at the rate of mortgage.
If we had asked for the capital balance to be recalculated then we wouldnt have the options to take payment holidays or draw down overpayments.
In our case with A&L the monthly payment due does not alter despite the overpayment but at the year end the Lender calculates the balance at year start less overpayments and calculates interest due for the forthcoming year. If my monthly payment due is 425 the the element which is capital is increased and the amount of interest reduced.

I wont this time say "hope that clarifies things" as I perhaps may not have. Perhaps some of the currently Cemap qualifed forum members can clarify whether Lenders who calculate interest daily, monthly or annually have differing rationale or possibly explain the difference more lucidly than I have attempted.

familychoice

Thanks for the replies

wodgerdodger wrote: »

The correct wording should be an Overpayment or a Capital Repayment. The former merely means you are in advance of payment, in credit effectively, and the Interest on the outstanding balance is not recalculated until the year end. A Capital Repayment means the total outstanding debt is recalculated immediately and you normally have a choice of either taking future lower payments over the remainng term or alternatively use the repayment to reduce the term and maintain current monthly payment level.

Hope that clarifies it

Yes that's what's happened. We wished to reduce the size of our mortgage by paying a lump sum and therefore reducing our monthly repayments. This was communicated clearly to the branch manager who dealt with us, but it appears that this was not communicated properly after we left between her and head office.

Head office made the assumption that instead of paying our normal £150 monthly payment we were attempting to pay about £8000 for that month, which is ridiculous. So ridiculous that they noticed the mistake themselves, sent us a letter telling us the mistake had been made, but with no apology and it seems they expect us to pay for their mistake.

Because the lump sum was not taken off our account for that month, to achieve the reduction in our mortgage that we had desired they say we now have to pay an additional £128.

I'll be visiting the branch tomorrow, but if they don't correct their mistake then I'll take the complaint to head office and then the ombudsman as dzug1 suggested.

I'll also be making a note of the time it's taking me to fix their error and sending them an invoice for my time.

TrickyDicky101

What is the basis of the £128? If it is an additional fee or interest you will suffer which you otherwise wouldn't have had they processed your £8k payment correctly then I completely agree - you shouldn't have to bear it. If it is simply a reallocation of payments (so that overall you have not suffered any loss) then I would suggest there isn't really anything to correct. It would be worth establishing with Santander how this £128 has arisen.

Green.Lander

I still do not understand i went into Barclays last paid £25k told them what i wante, how can anyone everything £8k was a monthly payment

DVardysShadow

familychoice wrote: »

.... Because the lump sum was not taken off our account for that month, to achieve the reduction in our mortgage that we had desired they say we now have to pay an additional £128.

I am guessing you have a mortgage in the 50,000 region, looking at £128 as a month's payment. If they processed £8,000 as early payment, it looks to me like they did not take the regular payment. Is this the case?