Can mortgage company hold overpayments but refuse to apply to my account?

Sweetmelody_2

Apologies for the long post. I would be really grateful for any advice....

I have a BTL mortgage with Paragon. In 2009, my interest payments dropped with the base rate and I talked to them about my options for reducing my mortgage faster than the term (I have notes from this conversation). I told them I wanted to make overpayments and I remember them telling me that I could do this, but that I would have to write to them after each payment was sent to let them know I wanted to make an overpayment. I have looked at my Outlook diary and I have monthly reminders set up to prompt me to contact them. I remember starting to send the overpayments but, after a period, making the decision to use the savings to overpay the mortgage on my main residence. So I stopped sending them.

Fast forward to 2015, I have just received a letter saying 'you have a credit on your account. Please let us know what you want us to do with it.' I called them to discuss and they admit that they have been holding £4,000 since 2009 but have not applied it to my loan account since they 'didn't know what I wanted them to do with it'??!! I have checked my personal email account and I can't find any record of having emailed them. I could have emailed them from my work email account, but I do not work for the same organisation any more so I cannot check. So the upshot is that they say they have no record on the notes for my account of any instructions, and I cannot prove that I instructed them, so I have lost out on 6 years of interest savings.

To add insult to injury they say that there were some overpayments on my account that I made prior to this time that they did apply to my debt, but they say that they came through 'in a different way' so were treated differently??!!

Can they legally do this?

Goldiegirl

From the information you have given it seems a little odd that they wouldn't apply a payment to your account.


It implies that they've been holding the £4000 in one of their sundry suspense accounts.


But most organisations wouldn't want random amounts of money just sitting around..... it makes it complicated for record keeping purposes.


When you made this payment in 2009, didn't you notice, when you checked your mortgage statement, that the £4000 wasn't showing?


Or perhaps it was credited to your account, but they didn't know whether it was a part repayment or not, and wanted your instructions whether to reduce the monthly payment or to reduce the term?

Sweetmelody_2

Thanks for replying Goldiegirl. It was four separate transfers to the account in a 12 month period. Embarrassed to say that I didn't realise that they had been made and not credited and therefore not showing on my annual statement (must go back and double check that it wasn't showing!). In my defence, I decided pretty quickly that I was better off using the interest savings to reduce one mortgage and not another, so probably forgot that some overpayments had gone through.

I take your last point, but not sure where I stand given that they knew the money was from me but didn't clarify my instructions for 6 years?

Thrugelmir

Sweetmelody wrote: »

I take your last point, but not sure where I stand given that they knew the money was from me but didn't clarify my instructions for 6 years?

If it's not a service they offer why should they? Companies simply don't have staff sitting around doing nothing. Given they were explicit ...

I remember them telling me that I could do this, but that I would have to write to them after each payment was sent to let them know I wanted to make an overpayment.

Seems as if you are the one at fault. Therefore should be kicking yourself rather than blaming them.

kazd

I used to work in Mortgage Collections at Nationwide. When people made overpayments the credit would just sit on their account and they would still save interest on the capital balance but the capital balance would not reduce. If you then took a payment holiday or had difficulties and couldn't pay your mortgage for a couple of monthsyou were in difficulties then the credit would reduce. However you could ask for the credit to be applied to the loan and at that point the balance would reduce. Rest assured the credit balance has still been working for you by reducing interest although to be honest it would be minimal but it just hasn't been applied to the capital balance.