Help understanding my mortgage completion statement

Calleja

Hi,

To save a long back and forth between me and my uncommunicative solicitors, please can anyone help me understand my mortgage completion statement?

It's a remortgage. New lender is advancing £224k, with £500 cashback and £999 arrangment fee, which we requested be added to the mortgage. The mortgage paperwork states:
Mortgage advance: £224,999
Net advance: £224,500
This I get.

The completion statement from my solicitors states: 
Net mortgage advance - including cashback of £500: £223,501

When I queried where this figure came from (because I was expecting it to say £224,500), I was told 'the mortgage lender have a £999 product fee which is included in your mortgage and deducted from the advance'.

Is this correct? It seems odd to me that it's been added onto the mortgage advance by the lender but then deducted from the advance by the solicitor. 

Thanks in advance for any help.

ACG

From what you have said I would assume you have a mortgage of £224,999 which is made up of:
£224,000 mortgage
£999 fee. 

Which would mean the solicitor should have £224,000 plus the £500 cashback. 

Which means what the solicitors have told you appears wrong. 
Maybe ask them for a screenshot of the amount they rceived hitting their bank account so you can go and speak to the lender. 

Calleja

Thanks ACG. Yes, that's my understanding and appears to be in line with the lenders paperwork too (solicitors should be receiving £224,500).

We aren't completing until 27/1/25 so I assume the solicitors won't have any money from the lender yet? But I'm keen to get it sorted asap, because currently the solicitors are saying we need to transfer them approx £800 to cover a shortfall, but if I work it out based on £224,500, they owe us money! I'll get back onto the solicitor. 

Hoenir

I'd expect the £500 cashback to be paid shortly after completion not before. The solicitor will only be advanced the net mortgage monies. 

So yes you'll be owed £500. 

Calleja

Thanks for responding Hoenir. I've seen the lenders paperwork which states that the net advance is £224,500, which covers the mortgage and the cashback. My understanding is that this is the amount which the solicitors should be receiving. So I'm happy that this is the way we will 'receive' the cashback (and goes some way to covering the solicitors costs). It's more how the £999 arrangement fee is being handled that I don't understand. 

ACG

Hoenir said:

I'd expect the £500 cashback to be paid shortly after completion not before. The solicitor will only be advanced the net mortgage monies. 

So yes you'll be owed £500. 

A lot of lenders release it at the same time as the mortgage funds now. 
Some do it within 30 days, a lot of the time the paperwork says within 30 days but its done at the same time. 

kingstreet

Check the solicitor understands the fee is being added to the loan first. It appears they are deducting £999 from £224,000 then adding £500 cashback leaving £223,501.

Calleja

Thanks kingstreet. That's what I understand to be happening. I think it's clear from the lenders paperwork that we've asked for the fee to be added to the mortgage, yet for some reason, the solicitors don't seem to get it. 

Calleja

Just to update, after contacting the lender and our mortgage adviser, the solicitor finally accepted that our version was correct and have updated their completion statement accordingly. I'm really surprised that it took so long to convince the solictor. As far as I'm aware, adding the fee to the mortgage isn't that unusual. All sorted so no harm done.....