Need help calculating daily mortgage interest

jgreen1986

Hi! I recently remortgaged, moving from Barclays to a new deal with Virgin Money. I provided all documents for the remortgage months ahead of time but the conveyancing solicitors (Optima Legal - avoid at all costs!) were useless. Completion took place 8 days after the Barclays deal ended meaning we spent 8 days on the Barclays SVR (8.74%).

I complained to the solicitors, who eventually admitted they'd messed up, and they agreed to refund the extra interest we paid during this period. However, I'm not sure exactly how to calculate this sum. The redemption figure for 3rd June (end of the Barclays deal) was £205,813.94. The 8 days of SVR was then added at £49.09 a day which comes to £392.72. This is what I'd like reimbursed. The solicitors however have said they will only reimburse £27 per day as they've subtracted the £22.09 of daily interest (3.84%) I'd have been paying to Virgin Money during these 8 days. Is this correct?

Sorry for long post and thanks in advance for any help!

silvercar

I can see it both ways.  If you had moved the mortgage when you should have done, you would have been paying interest for those days to Virgin, is their argument. 

Your argument would be that your new mortgage will end 8 days later, a time when you would not have any mortgage to pay. But their counter argument will be that you are unlikely to keep the Virgin mortgage for say 20 years, a point born out by the fact that you are moving providers now. 

penners324

Their calculation appears correct.

Compensation is based upon putting you back in the position you would have been without the error.

Phoenix72

Makes sense, otherwise those 8 days would effectively have been interest free for you.

BarelySentientAI

jgreen1986 said:

I complained to the solicitors, who eventually admitted they'd messed up, and they agreed to refund the extra interest we paid during this period. However, I'm not sure exactly how to calculate this sum. The redemption figure for 3rd June (end of the Barclays deal) was £205,813.94. The 8 days of SVR was then added at £49.09 a day which comes to £392.72. This is what I'd like reimbursed. 

That's not the extra interest for the 8 days.  That's the total interest for the 8 days.

jgreen1986 said:

The solicitors however have said they will only reimburse £27 per day as they've subtracted the £22.09 of daily interest (3.84%) I'd have been paying to Virgin Money during these 8 days. 

That's the extra interest for the 8 days.  On the face of it, then, they are correct.

Whether you have the argument that silvercar explains about extra interest over the entire life of the mortgage, I'm not sure.

ACG

I am not fan of Optima' but I think what they are proposing is correct. Thats how I would calculate it. 
Your free to dispute it and they will have a complaints process but I think you would just be wasting your time. 

What you want basically means they are paying all of your interest for 8 days rather than the extra interest you have been charged. 

Hoenir

As above comments. Solicitors are correct in their calculation. 

silvercar

ACG said:

I am not fan of Optima' but I think what they are proposing is correct. Thats how I would calculate it. 
Your free to dispute it and they will have a complaints process but I think you would just be wasting your time. 

What you want basically means they are paying all of your interest for 8 days rather than the extra interest you have been charged. 

OPs argument would be that the mortgage is finishing 8 days later than it would have done had the changeover happened on the correct day. So OP is focusing on the end 8 days of the mortgage, whereas the lender and most people here are focussing on the first 8 days.

eg assuming a 20 year mortgage that should have started on 1 July 2024 but was actually delayed to 9 July 2024. It will now end on 9 July 2044. So OP will be paying Virgin Money for exactly 20 years, so that bit is unchanged. But, due to solicitor admitted error, OP also had to pay Barclays from 1 to 8 July on the higher Barclays rate. 

BikingBud

So the interest rate needs to be reset and the capital that would have been paid off during the period also needs to included in order to overpay and bring the date back to 1 Jul 2044?

silvercar

BikingBud said:

So the interest rate needs to be reset and the capital that would have been paid off during the period also needs to included in order to overpay and bring the date back to 1 Jul 2044?

Transferring a loan amount of X to a new 20 year mortgage, should lead to the same payments with the new lender, whether the mortgage runs from 1 July 2024 to 30 June 2044 or 9 July 2024 to 8 July 2044. So the only extra payments that OP has made are the interest they were charged between 1 July 2024 until 9 July 2024. If it was a repayment mortgage, then the small amount of capital repaid over those 8 days will have resulted in a slightly lower transfer mortgage amount to Virgin, so would still end up being paid, though it would have been paid  to Virgin rather than to Barclays. The numbers OP posted of £49 a day, suggest what Optima legal are offering is based on an interest calculation only. Given the capital would be paid anyway to one of the lenders, then this is the right approach. Especially as Barclays seem to have calculated a redemption figure and then added interest.

jgreen1986

Thank you all for your helpful replies. My thought process aligned with what Silvercar is describing. I still have the full term of the Virgin mortgage to see out, but paid an additional 8 days of SVR to Barclays. Had the completion happened on time I would not have paid these 8 days so I feel I’m out of pocket by this amount. BikingBud makes a good point about the capital repaid during these 8 days. But I’m unsure how to calculate this. Over the last year I repaid around £4000 of capital through normal payments. This comes to around £11 a day. Would this be the right approach to calculating this? Thanks again!