Morgage payments held

Moneyqueen_3

I am in the process of remortgaging and have in the process have discovered that my present lender (Abbey) hold onto my monthly mortgage payment for 10 working days before reducing it from my mortgage.
I only found this out when the solicitors acting for the new lender asked me for a balance cheque for a "shortfall".
My questions are: (1) Is this common practise among all mortgage lenders? (2) As interest is charged on a daily basis, does this mean I am paying interest extra on the 10 days the monthly payment is withheld? (3) If I am being charged interest for the 10 days holding, is this legal?

Debt_Free_Chick

How do you pay? by cheque or DD?

As for interest charged .... you would need to know (ask Abbey) if they are calculating interest from date of receipt of payment or date it's credited to the mortgage account.

IveSeenTheLight

Moneyqueen wrote: »

I only found this out when the solicitors acting for the new lender asked me for a balance cheque for a "shortfall".

I take it this means you have a new lender, not Abbey.
If so you should ask their policy as it no longer matters with Abbey.
Like Debt_Free_Chick says, depending on how you pay the mortgage may affect when it is cleared.

I'm glad you brought this to my attention. I pay by DD and have a good spreadsheet for calculating roughly on a monthly basis my outstanding mortgage and interest payments. I can also see where any overpayment have reduced the term.

I will now change this spreadsheet into a dailly calulator and ask for more info from my lender

Richard_Webster

Unfortunately it is very often the case that there is a shortfall, so a solicitor will request figures from the old lender a week or so before completion so that if any further money is needed he has time to get it from his client. Someone remortgaging would not beat all happy if the completion was delayed because up to date figures were not available. Some lenders are very good, but others want several days notice to produce a figure.

This also means that very often the figure given does not take into account a payment made between getting the statement and completion. If there is an overpayment you will generally get it back a few weeks after completion.

If a solicitor uses a new lender's money he has to be completely certain that he has sufficient money to pay off the old mortgage. If he hasn't, then the solicitor has to find the money if his client does not pay,so understandably he errs on the side of caution.