Interest on lenders money kept by solicitors?

Amanda_Cm

Completion date 12th of March so today but not possible due to hold up further in the chain. They are waiting on redemption certificate tomorrow.
The funds from our lender were requested last week and now our solicitor is calling me to say that they will keep the money for few days but if the transaction is not possible, we still have to pay interest to the lender.
I don't understand what that means. We are already in debt before even get the house?
We didn't even exchange yet.
What if the chain collapse? We still need to pay interest?

stator

The mortgage agreement you signed probably says that interest starts on the date the funds are drawn down.

If the deal collapses and the money is returned I doubt they will bother asking you for interest. But they could do, if it's in the mortgage agreement T&C

davidmcn

Amanda_Cm wrote: »

now our solicitor is calling me to say that they will keep the money for few days but if the transaction is not possible, we still have to pay interest to the lender.
I don't understand what that means. We are already in debt before even get the house?
We didn't even exchange yet.
What if the chain collapse? We still need to pay interest?

Why don't you ask these questions of your solicitor when they call you?

Amanda_Cm

I just didn't think of it when she called and I can't reach her now.
Thank you, stator. I am going to read the t&c now.

TBagpuss

Stator is right, the T&Cs will almost certainly say that interest is payable from the time the mortgage company sends the money to your solicitors. if there is much delay then the solicitors will probably return the funds to the lender, but as they normally have to give a few days notice to get the funds, of the delay is only going to be a few days it makes better sense for them to keep hold of the funds.

Cheeky_Monkey

So you agreed to a simultaneous exchange/completion for today?

Very risky when you're in a chain!

Amanda_Cm

Cheeky Monkey, first time buyer here + foreigner so I am trusting the solicitor but coming here for advice all the time as there is lots of things I don't know and understand.
Our solicitor tough we can exchange last week but she wasn't informed about the problem in the chain. After all vendor's solicitor has agreed the Completion date.
All this process is slow and messy. Don't want to move house at least 10 years after this.

eddddy

Amanda_Cm wrote: »

Cheeky Monkey, first time buyer here + foreigner so I am trusting the solicitor but coming here for advice all the time as there is lots of things I don't know and understand.
Our solicitor tough we can exchange last week but she wasn't informed about the problem in the chain. After all vendor's solicitor has agreed the Completion date.
All this process is slow and messy. Don't want to move house at least 10 years after this.

Most people don't exchange contracts and complete on the same day - because of the uncertainty of if/when it will happen.

It's more usual to exchange contracts and then complete 2 or 4 weeks later.

The solicitor will then know in advance exactly when the mortgage money is required. (And all the buyers/sellers have 2 or 4 weeks to get ready for the move.)

Amanda_Cm

Thank you, eddddy. You are always helpful. I noticed people are exchanging and completing after 1-2-3 weeks but I trusted the solicitor and ... well that's the result.

AnotherJoe

To be fair to the OP it looks as if exchange was set for last week, completion today, but exchange got delayed and they stuck with today as completion.

AdrianC

Your lender has handed you the money. Of course you pay interest on it from the moment it's handed over. Why wouldn't you?

Your solicitor is currently looking after it. It is earning no interest in their client account. If completion was delayed substantially, it would be sent back to the lender - and the interest clock stopped. But, for a delay of a few working days, that will cause more problems than it solves.

Just pause and have a think about how much money's-worth of interest you're getting stressed about here...