Help: Changing Direct Debit charge?

Chacho

Good morning all

I work for an employer that is going to be changing the pay date for all employees effective from April 2015.

We are currently in consultation with all staff and one of the questions/issues that keeps popping up is that people believe they will be charged by their mortgage provider for changing the payment date.

My understanding is that a mortgage provider may ask you to make a payment that will cover any period that will be affected by the change of date but not levy an additional charge.

For example..... I currently pay my mortgage on the 1st of each month. I contact my mortgage provider on 10th of the month to change my payment to the 11th, meaning my next payment will be on the 11th of the following month leaving a shortfall of 11 days. My understanding is that the mortgage provider can and likely will ask for a payment to cover the 11 day shortfall.... am i correct?

My explanation may not be clear but if anyone feels they can help or point me in the direction of someone who can this will be a great help.

Dave_the_Ginger_Cat

It depends who your staff's mortgages are with and how the payment schedule is structured on that product.

The best way would be for them to ask their lenders, as they can look at different circumstances


In most cases, mortgages are on daily interest, so the customers are charged for the precise amount owed each day. If you change the payment date it is unlikely to alter how much is owed over the term but might mean an amount is due now.


If a customer is not disadvantaged over the long term, it becomes more of a cashflow issue, so owing say an extra 1/2 payment now rather than over the next 10 years, but no net increase.


If you are structuring a compensation package I'd be inclined to go down the route of an ex-gratia payment, with an option for a short term loan if a large payment is due now and they'd like to spread the cost. The onus is not on you to pay their mortgage unless you have directly caused the net amount to increase

Chacho

Thanks Dave