Confused by re-mortgage

[Deleted User]

Recently took out additional borrowing with RBS. Basically, meant leaving existing mortgage but adding on 20K at a new rate.

Few things confused about (I've yet to have chance to ring them). It all went through on 27th July.

1. My normal mortgage payment went through on 1st Aug. A couple of days later this was redunded. Apparently, my new payment is going through on 29th Aug. But surely this means I've made zero payments between 1st July and 29th August?

2. They paid a random figure £20626.42 into my account. I was expecting spot on £20K. Any ideas?

StuC75

For 1st of July to the 27th that will be in the broken interest covered on the redemption of the original mortgage.

for the 29th August you will pay the broken interest from 27th july to 31st July, followed by the full payment for August.

kingstreet

There should be no redemption here. The original mortgage remained as it was and additional borrowing taken.

The latter is usually provided via a sub-account.

RBS does charge interest in arrears, so I can understand why you wouldn't start paying until the month after completion, but the extra money you have received is odd.

Only one way to find out, I'm afraid...

[Deleted User]

Yes, will need to speak to them.

There may be some sort of redemption. I was previously with First Active who are no longer and now dealt with by RBS.

The way this was structured is £x main tracker mortgage plus £x as the extra borrowing on a different rate. So maybe they have moved me over to RBS but are obliged to leave me on the tracker rate (which is great at BR+1.1%).

kingstreet

Right. So it was a remortgage as there was a change of lender and mortgage deed.

In which case, I think StuC is probably correct. There will be accrued interest from completion date to month end and you may have gone from payment in advance to payment in arrears.

Finally, your new mortgage amount was probably a round figure and based on a higher redemption figure than was perhaps the case by the time you completed.

I'd still call them for confirmation though. I don't know how the process works from First Active to RBS, but you would normally keep the current rate on the current amount of borrowing, with additional borrowing on a new rate set up using a new sub-account.

[Deleted User]

kingstreet wrote: »

Right. So it was a remortgage as there was a change of lender and mortgage deed.

In which case, I think StuC is probably correct. There will be accrued interest from completion date to month end and you may have gone from payment in advance to payment in arrears.

Finally, your new mortgage amount was probably a round figure and based on a higher redemption figure than was perhaps the case by the time you completed.

I'd still call them for confirmation though. I don't know how the process works from First Active to RBS, but you would normally keep the current rate on the current amount of borrowing, with additional borrowing on a new rate set up using a new sub-account.

Its complicated because First Active no longer exist. They were always part of RBS but not its all being dealt with by RBS.

Like I said, main part of mortgage is staying on the old First Active rate of BS+1.1%