Mortgage Shortfall - Unexpected

0netrack

We are going through a remortgage process, and we are just about to complete in the coming days. We have been informed by the legal company that there is a 'shortfall', essentially that the amount we have requested is not enough to pay off the existing lender. The amount is not huge (around £750), but it still comes of something of a surprise, as we are finding out about this fairly late in the day, and it is a lot to come up with in a very short timescale (I have been told I'll need to pay it by card over the phone). Most of the reading I find out about shortfalls does not relate to this kind of situation. In fact, the only reference in these terms that I can find is on the website of the legal company we are dealing with. I would also have assumed that the final amount requested from the new lender would have been based on the final settlement figure from the old lender, so how can there be a shortfall all of a sudden?

I am trying to get back in touch with the mortgage broker (who we were recommended through MSE and have been great), but if anyone can offer any advice on this subject I would be very grateful.

nidO

0netrack wrote: »

I would also have assumed that the final amount requested from the new lender would have been based on the final settlement figure from the old lender, so how can there be a shortfall all of a sudden?

Even with a broker involved, this is the bit you should know. What was the settlement figure you obtained for your current mortgage, and how much did you then apply for on your new mortgage?

I have no idea whether all banks are the same but my other half has just remortgaged a property and the new bank's paperwork said they had a "buffer" of upto £1000 over the amount she applied for to cover slight changes in the redemption figure, if yours does similar then being a further £750 beyond this suggests you got your settlement figure or the amount you applied for with the new bank significantly wrong.

David_White

If you've still got the KFI from your previous mortgage I'd check the fees section and see if there's anything on there for £750.

I'm just speculating, but it could be some kind of redemption fee .

0netrack

It turns out the figure the solicitors got was as at 30 September. since then we have paid the standard monthly mortgage amount in early October. Their figure does not allow for this, and just adds on the daily interest from 30 September to today. I have got the latest redemption figure from the existing lender today by phone and it is well within the requested loan amount. I am passing this on to the solicitors and assume this will resolve the issue.

In the event that there was a genuine shortfall, I believe we were at the edge of the LTV so we could not have increased the amount borrowed from the new lender. Also, while I don't have the paperwork to hand, it appears there was no buffer within our new lenders terms.

somethingcorporate

As there isn't with every lender. Glad it was an easy solution, you would expect your solicitor to deal with the redemption and spot something like that...

Thrugelmir

0netrack wrote: »

I am passing this on to the solicitors and assume this will resolve the issue.

Solicitors should request a new settlement figure directly from the lender. Given the age of the one they are using.

0netrack

So the latest update - today I get a new redemption figure, and they owe us money! We are now due around £300. BUT - they will take off the telegraphic transfer fee of £42 to repay the existing lender (which is fine) and they will also take another £42 to transfer the money they owe us into our bank account (which is not fine).

I have requested payment by cheque instead - this avoids the second transfer fee.

David_White

You've got to laugh haven't you!

They'll probably charge you for the postage of the cheque lol