Cash back CHAPS charge

ryantcb

Our mortgage provider has given us £250 cashback apparently. How nice. It is £250 but our solicitor took £35 for chaps. I don't mind paying fees but how is it exactly cash back if solicitor takes a cut and we don't actually get the cash it merely is taken off our mortgage?

G_M

Solicior did ot take a cut - the bank did. That's a bank charge.

The question you should be asking is why was the cashback paid by CHAPS?

AdrianC

I think you're confused here.

Mortgage is £100,000.
Mortgage provider sends £100,250.
CHAPS transfer costs £35.
You "receive" £215.

Right?

The detail you're missing is that the £35 isn't for anything to do with the £250 cashback, and would have been payable anyway, for transferring the £100k to the vendor's solicitor. CHAPS is the default way of sending large payments - it's faster, more traceable and much more secure than a normal transfer.

ryantcb

G_M wrote: »

Solicior did ot take a cut - the bank did. That's a bank charge.

The question you should be asking is why was the cashback paid by CHAPS?

AdrianC wrote: »

I think you're confused here.

Mortgage is £100,000.
Mortgage provider sends £100,250.
CHAPS transfer costs £35.
You "receive" £215.

Right?

The detail you're missing is that the £35 isn't for anything to do with the £250 cashback, and would have been payable anyway, for transferring the £100k to the vendor's solicitor. CHAPS is the default way of sending large payments - it's faster, more traceable and much more secure than a normal transfer.

Yes the Bank sent £215. I am with you there but I have a seprate charge showing for CHAPs . So I have been charged twice. Do we pay the fee once when the bank sends the money to Solicitor and and gain when our solicitor sends money to vendors solicitor then?

sydenhambased

The money's been transferred twice.
You've been charged twice.

agrinnall

It's a long time since I bought a house but I have to say that I don't recall being charged two CHAPS fees, one for the bank to transfer the mortgage amount to my solicitor and a second for my solicitor to transfer the money to the seller's solicitor. Is that really what happens, and have two separate charges always been applied.

OP - from your bank statement can you determine how the £215 was transferred to you? If it was sent to you by your solicitor using CHAPS then I'd complain, as it really wouldn't have been necessary for such a small sum.

kingstreet

Normally, the lender makes a charge for transferring the money to the solicitor handling the purchase. This is upto £35 and is deducted from the advance.

Then, the solicitor pays on the purchase monies to the vendor's solicitor incurring another charge. How much the solicitor charges should be listed on the original welcome letter/fee quote.

A cashback is usually sent to the solicitor with the mortgage money and in most cases is simply included in the "pot" and the final payment to the solicitor would be reduced by that amount, so you'd effectively pay less deposit/solicitor's costs prior to completion.

If this didn't happen, the solicitor would have £250 in hand and would need to ask the client what to do with it. It may be issued by cheque, BACS or CHAPS and in the latter case you'd expect a charge of the same amount as that for the transfer of the purchase funds to the vendor's solicitor, as it is transactional rather than value based.

The question is, did the solicitor ask the client how they wanted the money and explain the cost implications?

loubel

ryantcb wrote: »

Do we pay the fee once when the bank sends the money to Solicitor and and gain when our solicitor sends money to vendors solicitor then?

Yes, this is normal. Your lender's fees would have been set out in the mortgage offer and your solicitor's fees should have been sent to you at the start of the transaction. If you requested any proceeds to be sent to you by CHAPS then you would pay a third bank transfer fee.

davidmcn

agrinnall wrote: »

OP - from your bank statement can you determine how the £215 was transferred to you?

From the OP it sounds like it wasn't transferred anywhere and it's just been credited by the lender to the mortgage account. Which I agree isn't really what people might think of as "cash back" but it amounts to much the same thing.