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  • Mortgages & Finance

    Mortgage company suspicious of over-payment

    I have an interest only variable mortgage and have been trying to pay off the capital. 

    I have made one big payment and mortgage company want proof of how I can afford this sum.  I dont want to send them copies of bank statement as far as I am concerned it is none of their business. 

    I have queried this with and even said that at end of mortgage term they will request the capital and will not be happy if I don't pay if off - their response they are expecting me to refinance it. 

    I want to pay it off before the term is up. They have written again requesting documentation do I have to send them the documents.

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    Most lenders only allow an over-payment of 10% per annum.  Was the amount more than this?

    If so, I can understand why they might be perplexed.  They lent you money based on your borrowing that money for a certain period, and now you are paying it off a lot quicker.

    They might regard it as their business that you breached the T & C's of the mortgage and they may be wondering where the money has suddenly appeared from as it could look like a form of money laundering unless you have a reasonable explanation that can be verified.  If you had all that money sitting around, they might wonder why you borrowed so much from them in the first place..  I am only guessing here though.

    I would try and ascertain why they are asking and co-operate with them.  You presumably don't want them calling in the loan - extreme but possible.

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    Hi Vanessa, Thank you for your reply.  Yes it was over 10% but this is the first year (13 years into 25 year mortgage) that I have made a payment. At some stage I have to pay it off so doing it it chunks.  I have asked for a new deal but this company is not doing so decided to remortgage elsewhere.  They have not mentioned breach of T&Cs.

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    Is it Mortgage Express by any chance?

    If you need assistance finding a suitable new mortgage, please don't hesitate to call the expert team at Property Tribes Financial Services on 01206 654444.

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    This will be because of the risk of money laundering. Banks and other organisations need to verify source of funds if the payment is over a certain threshold (it used to be EUR15,000). In recent years the rules are tightening up (particularly since HSBC gone done). You will need to provide some evidence as there is no discretion on these rules.

    if you are thirteen years into your mortgage you would have been looking at rates back in 2005/6. Rates fell after  2008 so it might be worth calling a broker to see if you can get the rate lower - that could help you repay the mortgage.

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    Chartered Accountant, Tax Advisor and Mortgage broker

    (and BTL portfolio owner)

    stuart@johnsonsca.com

    02039077022


    Just take off your shoes and run, run and don't look back. they'll never catch you Wink

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    Stuart is correct, its money laundering, banks and other lenders always question these lump sums, paying off a lump from your mortgage is the same as paying it into a deposit account... justifying the source of funds is one of the key roles of banks in adhering to money laundering guidelines. Don't worry, give them the evidence they request. If you are clean you have nothing to worry about Smile

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