New m'gage completion date close to old repayment date

m0rgana

Sorry about the not-too-pithy title.

So...after at least eight weeks of fuss, we've finally been given a completion date for our re-mortgage. Couldn't come quickly enough, as this is going to help me save some much-needed funds.

But there's one final issue to contend with, and I'm sure someone here can help.

The completion date we've arranged is set for one day before our usual payment goes out to the old lender (don't jump on me please, my husband agreed this with the solicitor in my absence - he just wanted it sorted asap and did not want another month of paying the higher rate.)

Obviously we won't want to cancel that standing order until we are 100% sure that they've received final payment, but I'm concerned that we may receive confirmation too late in the day to be sure that cancellation is effective the following day.

That being said, I've read up on a few bank websites and most seem to say that a standing order can be cancelled with immediate effect provided it's done within business hours.

Am I panicking unnecessarily here or are we cruising for a bruising? And if we DO end up paying an extra repayment to the old lender by failing to cancel in time, is there a procedure to get it back or have we lost that money? It's over £1000 per month, unfortunately.

Thanks for reading

Goldiegirl

Firstly, is it a direct debit or a standing order.

A direct debit is controlled by the lender and a standing order is controlled by the payer (you)

Secondly, the solicitor will apply for a redemption figure for the day of completion, so it will be assumed that no monthly payment is made that month. ( the redemption figure will be slightly higher than it would have been if a monthly payment had already been received that month.

Thirdly, in theory, if it's a direct debit, and the mortgage is fully repaid and the account closed, they won't call for the direct debit to be paid. In fact some lenders stop the collection of a direct debit when a redemption figure is given out.

BUT, you can't rely on them not collecting a direct debit. If they did collect the direct debit the money would eventually be returned to you, but would take a few days.

So to sum up, I would cancel my standing order, or delete the direct debit authority from my current account so they couldn't collect it.

However, I'd keep the money, as it'll be needed to pay the first payment on the new mortgage, which is typically larger than normal, as it'll include interest from the date of completion.

Hope this makes sense!

dotdash79

Goldiegirl wrote: »

So to sum up, I would cancel my standing order, or delete the direct debit authority from my current account so they couldn't collect it.

However, I'd keep the money, as it'll be needed to pay the first payment on the new mortgage, which is typically larger than normal, as it'll include interest from the date of completion.

Hope this makes sense!

I agree cancel the SO or DD then keep hold of the cash, the day after completion give your old lender a call and confirm everything is OK.

kingstreet

Remember. You need to cancel the direct debit or standing order instruction at least three days before the payment is due with most banks and building societies.

Otherwise, I agree with the others. You should not make the next payment.

m0rgana

kingstreet wrote: »

Remember. You need to cancel the direct debit or standing order instruction at least three days before the payment is due with most banks and building societies.

Otherwise, I agree with the others. You should not make the next payment.

*nod* obviously there was no chance of us doing this three days in advance, as our completion date was provided with only two days' notice. Hence my panic!

My husband has now cancelled the direct debit as soon as we had notice of completion (this morning). But from everything his bank has said, we should be OK as the lender has no reason to collect funds from us when we have paid off our account.

Fingers crossed...