Bank issues/mortgage completion delays

RPH9891

Hi All,


I am a first-time buyer and recently I paid my mortgage deposit after being advised by my solicitor that he was ready to exchange the contracts and complete the purchase.


A day after I paid the deposit, I was advised by my solicitor that the seller had delayed the completion as she wasn't ready to move, and therefore he couldn't exchange the contracts.


That was two weeks ago, and currently the seller is still not ready to move. However, Barclays (the bank who my mortgage is with) has taken a mortgage payment from my bank account yesterday.


When I explained to them that the completion had been delayed, I was told they had it noted down as it was live, and that if I don't make any further payments, I will fall into arrears - this is despite the fact nothing has been exchanged and I'm no closer to having the keys now than I was prior to paying the deposit.


My solicitor has transferred the deposit back to me and faxed them again to advise them the completion has been delayed, but when I asked about how to go about getting a refund, he said he has never encountered this issue before and that while he doesn't expect them to take any further payment, he couldn't guarantee it.


This whole process has been extremely stressful already and now I'm having visions of paying towards a mortgage for a house I don't own and I won't be able to get my money back!


Has anyone been in this situation before or can provide any advice?


Thanks.

babyblade41

I'm so sorry I can't offer any help but I have never heard anything like this before
As far as I was aware the money doesn't get transferred over to seller until the completion completes and so the money is still with the mortgage lender.

I don't see how you have to pay for something that doesn't belong to you yet

Will be interesting to see what others with experience can tell you or if it is a common occurrence

Bossypants

This does sound very odd, but with Barclays I can't say I'm surprised. I once had my property change address due to a Council decision about the naming of the road, and getting their systems to understand and reflect it in the end required me to physically sit in their office for almost three hours twice while the poor personal banker assigned to me tried all kinds of escalations and workarounds.

That said, while my normal reaction to this kind of thing would be 'raise a formal complaint', in this particular instance I would be concerned that that could result in your entire mortgage offer being accidentally revoked ('Oh, RPH9891's mortgage was a mistake? Whoops our bad, we'll refund the money and close the file asap!'). Some might disagree, but if we're talking a matter of a few extra weeks and you can afford it, I would be inclined to wait it out until you've completed, then raise a formal complaint to get the interest refunded or credited to the account once you're 'safe'.

babyblade41

Have you approached the bank direct?

Grey_Critic

Simple explanation. You apply for a mortgage - it is granted. At that point the money is allocated and starts to earn money (interest) for the lender. The payments start being taken from your account. The delay is unfortunate but it can/does happen. The lender is not interested except where for some reason the sale/purchase falls through. Monies are held in Escrow pending completion.

Slithery

Grey_Critic wrote: »

Simple explanation. You apply for a mortgage - it is granted. At that point the money is allocated and starts to earn money (interest) for the lender. The payments start being taken from your account. The delay is unfortunate but it can/does happen. The lender is not interested except where for some reason the sale/purchase falls through. Monies are held in Escrow pending completion.

Where are you getting all of this from as it's simply not true.

Are you by any chance talking about US property transactions as we don't have escrow in this country.

Bossypants

Grey_Critic wrote: »

Simple explanation. You apply for a mortgage - it is granted. At that point the money is allocated and starts to earn money (interest) for the lender. The payments start being taken from your account. The delay is unfortunate but it can/does happen. The lender is not interested except where for some reason the sale/purchase falls through. Monies are held in Escrow pending completion.

That's not how any of that works. I think you may be getting mixed up with something else?

Edit: That's what I get for leaving the reply window open, Slithery is probably right about the US thing.

RPH9891

babyblade41 wrote: »

I'm so sorry I can't offer any help but I have never heard anything like this before
As far as I was aware the money doesn't get transferred over to seller until the completion completes and so the money is still with the mortgage lender.

I don't see how you have to pay for something that doesn't belong to you yet

Will be interesting to see what others with experience can tell you or if it is a common occurrence

This is what I don't understand either - I have everything confirmed in writing that the sale has been delayed and I have my mortgage deposit back with me too - my solicitor is adamant the bank was aware so I'm confused what exactly is going on.

davidmcn

babyblade41 wrote: »

I'm so sorry I can't offer any help but I have never heard anything like this before
As far as I was aware the money doesn't get transferred over to seller until the completion completes and so the money is still with the mortgage lender.

No, the funds are transferred between the solicitors. So before completion can happen, the buyer's solicitor needs to have received the mortgage funds from the lender. They'll generally need to give several days' notice of when they want the money, so if there is a short (or no) gap between exchange and completion, the solicitor may have to request the funds based on an estimate of when everyone hopes completion will happen.

If completion ends up being delayed, the solicitor should tell the lender, otherwise the lender will assume completion has happened on time and start charging the borrower as expected. So I suspect the problem here is the making of the OP's solicitor if they've omitted to warn the lender of the delay. At some point (usually after a couple of days) the solicitor would be required to send the money back to the bank.

RPH9891

Bossypants wrote: »

This does sound very odd, but with Barclays I can't say I'm surprised. I once had my property change address due to a Council decision about the naming of the road, and getting their systems to understand and reflect it in the end required me to physically sit in their office for almost three hours twice while the poor personal banker assigned to me tried all kinds of escalations and workarounds.

That said, while my normal reaction to this kind of thing would be 'raise a formal complaint', in this particular instance I would be concerned that that could result in your entire mortgage offer being accidentally revoked ('Oh, RPH9891's mortgage was a mistake? Whoops our bad, we'll refund the money and close the file asap!'). Some might disagree, but if we're talking a matter of a few extra weeks and you can afford it, I would be inclined to wait it out until you've completed, then raise a formal complaint to get the interest refunded or credited to the account once you're 'safe'.

I can live without the payment for the time being (as long as I get it back in the future), my main concern is them attempting to take the payment again from me. If that happens then suddenly what is a few hundred pounds becomes a large chunk of money and I really don't want them to even attempt to do this. I am going to call them again tomorrow when I will have time to deal with this properly and if that fails then go to the branch.

RPH9891

davidmcn wrote: »

No, the funds are transferred between the solicitors. So before completion can happen, the buyer's solicitor needs to have received the mortgage funds from the lender. They'll generally need to give several days' notice of when they want the money, so if there is a short (or no) gap between exchange and completion, the solicitor may have to request the funds based on an estimate of when everyone hopes completion will happen.

If completion ends up being delayed, the solicitor should tell the lender, otherwise the lender will assume completion has happened on time and start charging the borrower as expected. So I suspect the problem here is the making of the OP's solicitor if they've omitted to warn the lender of the delay. At some point (usually after a couple of days) the solicitor would be required to send the money back to the bank.

Okay - my solicitor has said he did make them aware but has told them again. As I have got the funds back into my account, would that make it seem that they couldn't possibly attempt this again?