Direct debt over payment on final mortgage payment

john1972

Hi,

Just wondering if this has happened to anyone else.

Example:-

My normal mortgage payment would be £657 per month with my final payment being £24.83p
However the bank still continued to take out £657. When I contacted them they informed me that the direct debt firm did not recognise the change in monthly total and that in approximately 10 to 15 working days they would pay the over payment back into my account. Fair enough I hear you say, however!

Correct me if I am wrong here, but say this happens to 50,000 mortgages across the UK at an average of 500 pounds, there would be collections of over payment summing up to £25,000,000. This then takes 10-15 days to pay back where does all the interest go?

Now if you can imagine that they are doing this on bank loans and mortgage payments, that is a serious amount of money which is being used by the banks to make stealth profits The funds that do not belong to them.

What if that figure was 100,000 mortgages at £500 and 100,000 loans at £300. that would be a staggering £80,000,000 of which they are taking interest off for 10 to 15 days.

These figures are all made up, but this is happening FACT. My point being that in today's market with computer power and its ability to correct data anomalies automatically and immediately why are these final over-payments happening?

I believe it is a loophole which the banks or debt agencies are using to make financial gains where there should not really be any.

Ofc i could be wrong..

Which is why I am posting on here, so that someone can put my mind at rest :j

Aquamania

john1972 wrote: »

Hi,

Just wondering if this has happened to anyone else.

Example:-

My normal mortgage payment would be £657 per month with my final payment being £24.83p
However the bank still continued to take out £657. When I contacted them they informed me that the direct debt firm did not recognise the change in monthly total and that in approximately 10 to 15 working days they would pay the over payment back into my account. Fair enough I hear you say, however!

Correct me if I am wrong here, but say this happens to 50,000 mortgages across the UK at an average of 500 pounds, there would be collections of over payment summing up to £25,000,000. This then takes 10-15 days to pay back where does all the interest go?

Now if you can imagine that they are doing this on bank loans and mortgage payments, that is a serious amount of money which is being used by the banks to make stealth profits The funds that do not belong to them.

What if that figure was 100,000 mortgages at £500 and 100,000 loans at £300. that would be a staggering £80,000,000 of which they are taking interest off for 10 to 15 days.

These figures are all made up, but this is happening FACT. My point being that in today's market with computer power and its ability to correct data anomalies automatically and immediately why are these final over-payments happening?

I believe it is a loophole which the banks or debt agencies are using to make financial gains where there should not really be any.

Ofc i could be wrong..

Which is why I am posting on here, so that someone can put my mind at rest :j

No, not fair enough. You won't hear that from me at least.

Refer to the Direct Debit Guarantee.
Where an error has been made, you claim via your bank ... and they have to accept your word it was in error.
They have to refund immediately.

I did a claim today.
Bank told me it could take until the end of the day to be re-credited.
Well even that is not immediately as I understand the word, but I let it go.
Account was not showing credit 30mins after processing, but did show it 3 hours after processing
(what time it actually was credited is therefore sometime between 30mins & 3 hours)

Lemonsqueezer78

What if it happened to 3 loans and 2 Mortgages - and they only made £5.35 in interest. Would you feel better then?

Because there is as much evidence that my made-up numbers are correct, as there are that your made-up numbers are. If it helps you to sleep at night, that money you overpaid isn't sitting in a nice interest generating bank account. Its a number....sitting in a accounts receivables system. A ledger. Nothing more. Its not sitting in an actual interest earning bank account. That is the reality. I hope this fact enables you get past this.

I'm not a defender of Banks or Financial institution but life really is too short to let this kind of stuff eat you up - I suggest that if you feel the bank is taking too long to return your money and you want the bank to pay you back your interest (and I do agree, that is a unnecessarily long delay in this day and age), that you ask for this to be paid back to you too. Or that you make a claim via your bank, under the direct debit guarantee, which should provide you with an immediate credit so long as you can clearly show an mistake has been made.

Failing this, you could make a complaint to the FOS and insist that they investigate all banks nationally to determine how widespread this practice is and see if they take up your complaint. But here is a hint that may save you some time.... they won't.

AnotherJoe

First of all you say "imagine if.." And extrapolated out to a ludicrous degree, IMO that makes your maths invalid.i paid my mortgage off last week. No direct debit mess ups. Indeed it was cancelled by them automatically. Doesn't fit with your suggestion this is how they operate as a cunning scheme.

Next, have you seen what interest rates are? Interest on £650 for one month would be around £20. The cost of your telephone call to them and the admin to fix would probably be about £50-£100 when you think if all the people involved backing out transactions, checking unusual activities like this in case it's associated with fraud.

So far from being a money spinning exercise you suspect, it will cost them.

Also, if they were doing this deliberately it would take collusion of masses of employees and they would inevitable face massive fined once the scam was uncovered.

Finally, they could get the equivalent amount per mortage by simply adding £20to the mortgage closure prices cost ( for example my bank charged me £95). Far easier and doesn't involve management going to prison for deliberate fraud that would need to be implemented by multiple levels in the organisation.

Thrugelmir

john1972 wrote: »

My normal mortgage payment would be £657 per month with my final payment being £24.83p
However the bank still continued to take out £657.

If that was the case I'd ring for a settlement figure. Along with cancelling the direct debit. Making the payment manually.

Don't forget there's a closure fee to be paid as well.

Goldiegirl

I assume that this scenario you have in mind is when the mortgage comes to the end of it's term.

If the mortgage balance was £24.83, and a direct debit of £657 is paid in, it would leave a credit balance on the mortgage of £632.17

The bank would then close the mortgage, deducting any final fees from this credit balance, and would refund the remaining money to you.

Basically, the money is sitting in an account with your name on it.

So there's no secret money making ruse. The money is in your own mortgage account, not in the banks coffers.

I hope your mind has been set at rest. It's not a scheme for financial gain for the bank - it's actually more admin for them which costs staff time.