Set-up fee added to mortgage

ohdarn

Hello, we're getting towards the end of the process of moving house and have been sent a draft final statement by our conveyancer.
On the statement it has a list of calculations regarding how much we'll need to move house. 
In that calculation it lists 'Mortgage Advance from *lender* after lender has deducted £995 for product fee: £136,995' (we're adding the product fee to the total of the mortgage.
The thing is, the lender should be providing £136,000 (we're providing £24,000 as a deposit) and the £995 is the product fee.
We've contacted the conveyancer and they claim that they will be receiving £136,995 from the lender and have taken that extra £995 off the final total that we need to settle all the bills and whatnot.
So I'm not sure how that £995 fee works and I'm confusing myself.
I guess they need to loan us the £995 but surely they wouldn't give us £995 first?
Is the conveyancer wrong, how do product fees actually work?
Hope that made sense.
Thanks very much.

davidmcn

What does it say in your mortgage offer? They don't all follow the same format and they don't all make it particularly clear how much the solicitor is actually going to receive.

greatcrested

You are borrowing 136,000.

You owe 995 to the lender for setting this up.

Instead of paying this 995 yourself, you have chosen to add it to your mortgage.

So in effect your mortgage is now 136,995.

Administratively this is being done by sending the 136,995 to your solicitor.

He will send 136,000 to your seller on Completion and return the 995 to your lender.

You will owe the lender 136,995.

ohdarn

davidmcn said:

What does it say in your mortgage offer? They don't all follow the same format and they don't all make it particularly clear how much the solicitor is actually going to receive.

The offer paperwork isn't terribly helpful. I'll paste some excerpts,
'This offer is based on borrowing £136,995 including £995 of fees that have been added to the loan.'
'£995 - Product Fee. This is only refundable before the mortgage starts and is payable to Lender on submission of your application. This fee has been added to the loan.'
But there's nothing particularly specific.
Do you get the £995 and then pay it back as part of your first installment or do you just get the £136,000 sent to the conveyancer and then the £995 is added to your mortgage balance?
I don't get it, and I really need to know how it works. I can't find anything on the internet that explains the exact way it works.

ohdarn

greatcrested said:

You are borrowing 136,000.

You owe 995 to the lender for setting this up.

Instead of paying this 995 yourself, you have chosen to add it to your mortgage.

So in effect your mortgage is now 136,995.

Administratively this is being done by sending the 136,995 to your solicitor.

He will send 136,000 to your seller on Completion and return the 995 to your lender.

You will owe the lender 136,995.

Thanks for the reply. Are the conveyancers calculations incorrect in this instance then, as they have not factored in the part about them returning the £995 to the lender. Instead they have used it to subtract from their fees?

davidmcn

greatcrested said:

Administratively this is being done by sending the 136,995 to your solicitor.

He will send 136,000 to your seller on Completion and return the 995 to your lender.

Never encountered that before, much more likely that the lender just pockets the £995 immediately and sends the £136,000 to the solicitor.

We'd need to see the solicitor's statement to check whether it makes sense.

ohdarn

Here's a copy of the statement: 

davidmcn

ohdarn said:

Here's a copy of the statement: 

Nah, they've got that wrong. Should just be the £136,000 there, so the amount you'll be paying is £995 more than they're saying.

ohdarn

Thanks, I'd assumed they had got it wrong but what threw me was that when we'd rang them, they said they hadn't

kingstreet

NatWest mortgage?