Mortgage Company Wrongly Allocating Overpayments

OBIWAN

Hello everyone, I have an interest only mortgage with Heliodor, I've never had a direct debit set up and have always made a bank transfer each month.  Recently I've been able to pay off a bit more each month, so i've been sending them a single lump sum.  Recently I noticed missed payments on my credit file so i complained to them and they replied saying that, when they receive a lump sum that differs from the contracted monthly amount, they allocate all of the payment as a capital repayment and mark me down as having missed the contracted payment.
This seems ridiculous; Im sure any reasonable person would expect them to allocate an amount to the monthly contractual and allocate the surplus as a capital repayment.

Could anyone give me some advice please?
tks!    

MWT

OBIWAN said:

...Recently I noticed missed payments on my credit file so i complained to them and they replied saying that, when they receive a lump sum that differs from the contracted monthly amount, they allocate all of the payment as a capital repayment and mark me down as having missed the contracted payment.

I can certainly believe that if you didn't tell them what you were doing before sending them payments that didn't match the monthly amount, that mistakes and misunderstandings could occur.

This isn't like paying money each month into your electricity account and they then deduct what you owe... You send them a payment which has to be allocated to your account, when you send the contracted monthly payment it will get applied correctly, when you send something else it is not recognised as that payment so gets applied as a capital reduction, inconvenient but perfectly believable.

Have they agreed to repost these amounts the way you intended them to be handled? 

In future, just send two separate transfers...

OBIWAN

MWT said:

OBIWAN said:

...Recently I noticed missed payments on my credit file so i complained to them and they replied saying that, when they receive a lump sum that differs from the contracted monthly amount, they allocate all of the payment as a capital repayment and mark me down as having missed the contracted payment.

I can certainly believe that if you didn't tell them what you were doing before sending them payments that didn't match the monthly amount, that mistakes and misunderstandings could occur.

This isn't like paying money each month into your electricity account and they then deduct what you owe... You send them a payment which has to be allocated to your account, when you send the contracted monthly payment it will get applied correctly, when you send something else it is not recognised as that payment so gets applied as a capital reduction, inconvenient but perfectly believable.

Have they agreed to repost these amounts the way you intended them to be handled? 

In future, just send two separate transfers...

Hi MWT, thanks for the reply.  I suppose I assumed that's how they would deal with it, as per your electricity account example, that they would allocate the monthly amount and the rest is an overpayment.   It all goes into the same account after all.

Heliodor are a nightmare to deal with: they take weeks to allocate payments to my account, their web portal has very limited info, call centre staff are really crap and they only accept snail-mail for written comms.  The problem is that, because I've been making overpayments, I never know my exact contractual monthly payment since it changes every month and the call centre can never give me that info.  Can you believe they even lost £2000 for 3 months!

My biggest worry is the hit my credit file has taken.  D'you think its worth raising an ombudsman complaint? 
Tks again.
 

MorningcoffeeIV

Not until you've tried to resolve it with the lender or they'll just close the door in your face.

MWT

OBIWAN said:

The problem is that, because I've been making overpayments, I never know my exact contractual monthly payment since it changes every month and the call centre can never give me that info.  Can you believe they even lost £2000 for 3 months!
 

That is why a DD would be the safest way to avoid accidental credit file problems...

OBIWAN said:

My biggest worry is the hit my credit file has taken.  D'you think its worth raising an ombudsman complaint? 
Tks again.
 

As above, you first need to talk to the lender however frustrating that may be and if they will not correct the allocations, you can file a complaint with them and go through their complaint process, then if still no satisfactory outcome you can go to the Ombudsman.

I'm not sure what I would expect from the Ombudsman in this case though, as you didn't help your case by just sending lump-sums to them, without also advising them how you wanted the money to be applied.

OBIWAN

Tks for the replies, i'll make sure i set up a DD with them so that the regular monthly amount is covered.
On a side note, I got a letter from them today asking for proof of the source of funds for the overpayments.  My work is seasonal and so a few times a year I earn more, hence the overpayments.  All payments have come from my current account - the same account I've always paid them from - so they already know where the funs are coming from.  Dyou know what they might need?

MWT

OBIWAN said:

All payments have come from my current account - the same account I've always paid them from - so they already know where the funs are coming from.  Dyou know what they might need?

They will be looking for proof of where the funds came from before they arrived in your current account, so payslips for example or if a transfer into your current account from another of your accounts they will want to follow that chain backwards to reach a source.

Hopefully you are not just depositing cash with no paperwork behind it... ?

OBIWAN

I guessed so, but isn't it my bank's job to do due diligence on where the funds come from? I've never paid cash into my mortgage account.  Im self employed, bill all my clients on a monthly basis and dont ever accept cash payment, so there's a proven paper trail.

[Deleted User]

OBIWAN said:

I guessed so, but isn't it my bank's job to do due diligence on where the funds come from? I've never paid cash into my mortgage account.  Im self employed, bill all my clients on a monthly basis and dont ever accept cash payment, so there's a proven paper trail.

You are the only one that can check where the funds come from, the due diligence is yours to ensure you're transaction is correct/legit/whatever.
Failure will result in un-necessary complications, which take, your, valuable time and effort to then sort out.

MWT

OBIWAN said:

Im self employed, bill all my clients on a monthly basis and dont ever accept cash payment, so there's a proven paper trail.

Then you shouldn't have any problems demonstrating the source of the funds if they ask for proof beyond the explanation that these are the proceeds of your self-employment.

Goat_Face

Apro po of not much. Funny how different institutions work.

My mortgage is with a provincial building society, I  pay by bank transfer on payday, until recently, for a few years I paid more than the required amount by not reducing it when I no longer had building/contents insurance with them, not reducing when interest rates dropped and by rounding up the pay to the nearest £. It was never huge amounts, but it started to add up

I didn't formally tell them why I was overpaying, daftly, I assumed it would just come off the balance and never closely checked the annual statement. Out of the blue I had a letter/statement detailing the amount that was just "sitting with them" so to speak. 

All the little amounts added up to three months mortgage payments over the years. (about £1600)

So I called to discuss this, found out if I want to overpay I have to tell them (stupid me) and that otherwise the money sits with them, doesn't earn interest, and is automatically used to cover any payments, including shortfalls, that haven't been received by normal payment means by the due date.

The (very nice) lady I spoke to told me that they have borrowers who will sporadically pay several months in advance, some for the whole year (?) and as long as the mortgage account is up to date all is well.

She also told me I can't have it back (boo!) as it is ringfenced now, and any funds left there at the end of the mortgage term will be used to close it

I probably should have been more on the ball; properly told them I want to overpay, or put it in a savings account. But, in a way, I feel comfortable with my decision; if a problem arises one thing I don't have to immediately worry about is paying the mortgage.