Buy to Let Mortgage Lender Refusing Lump Sum Overpayment on Interest Only Mortgage

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    Buy to Let Mortgage Lender Refusing Lump Sum Overpayment on Interest Only Mortgage

    I have had five B2L mortgages on properties with a small building society since 2006. I have been selling my B2L portfolio over the last three years in preparation for retirement. I now have only one mortgage with this lender. 20 year term with 7 years remaining. having sold 5 properties in the last two years (including two with this lender) I am now cash rich and wanted to pay £60,000 off a £105,000 mortgage. I transferred an initial £24,500 which the building society refused to credit to my mortgage account. My mortgage agreement allows over payments, and the FCA positively encourages them for interest only mortgages.
    They refused to credit my account because of Money laundering rules they have put in place. After a pretty heated discussion and the involvement of their CEO I agreed to instruct my solicitor to confirm to them that I had sold five properties (including the two with them) and had received substantial funds as a result.
    I thought this would satisfy them (as the CEO had promised) but their Head of Financial Crime (yes that's her real title) ruled that this wasn't sufficient proof and the solicitor had to produce completion statements and proof that funds were transferred to me. My solicitor and I thought this was ridiculous so I withdrew my permission for her to deal with them any more. The Head of Financial crime then came crying back to my solicitor saying she may have made a mistake, but my solicitor said she was now not instructed to respond.
    At this point I asked advice from the Financial Ombudsman and they said I should make sure the building society's nominated complaints officer was aware of the issues and gave me his name. They advised that the CEO was not the appropriate person to be dealing with.

    So I emailed the nominated person pointing out that I had been advised by the FO to advise him of the complaint, and that his building society was holding £24,500 of my money but refusing to credit it to my mortgage account.

    I almost immediately received a terse, if not rude reply, saying the money would be returned today (it hasn't been) and he would deal with my complaint in due course.

    In my view they are in breach of my Mortgage Agreement which clearly allows over payments. Do others agree?

    I suspect they know they have handled this very badly bearing in mind my customer profile, never missed a mortgage payment etc. The advice to businesses regarding money laundering is pretty clear in that they need to act proportionately and know their customer. If they bothered to look on the Land Registry or Zoopla etc.regarding the two sales of properties in the last two years that were mortgaged with them they would see a substantial amount of equity was released, but they refuse to do this.

    Has anyone else incurred this where effectively a building society is refusing to let a customer pay down their mortgage on what I believe are spurious nonsensical anti-money laundering rules? Someone pointed out what will happen at the end of the term if I refuse to show proof of funds but am prepared to repay the balance of £105,000?

    Thoughts anyone?
    Richard Oppé

    Informed, Independent and Honest Property Advisor

    #2
    The building society is not refusing to allow you to pay down the mortgage, they are refusing to transfer a large sum of money out of one of the accounts that they manage.
    Which is something completely different.

    I think that they are totally within their rights to do that and that you were wrong to tell your solicitor not to give them the evidence that they requested.
    That's just shooting yourself in the foot (and would cause further suspicion).
    You should simply have let the solicitor comply with the request.

    I have recently paid off a mortgage and had to provide evidence of the source of the funds and show the path of the funds from that source. Which took a bit of time and was a bit of a pain, but it's hardly the end of the world.

    It isn't reasonable for you to expect them to do any research themselves, because there's more to the process than that. Your solicitor is required to do money laundering checks themselves so their involvement would be a significant factor in satisfying the money laundering concerns.

    It is quite possible that the building society has been a bit over-zealous and that you might, as a consequence, not do further business with them, but I don't think they're being ridiculous.
    I'm quite impressed that they take money laundering so seriously because most organisations don't take it anywhere near seriously enough.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      In circumstances like this quite likely/hopefully HMRC have already been informed of suspicious financial manoeuvres being plotted.

      Given your displeasure with your lender, why not just pay the mortgage off and close all accounts with them, job done?
      I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

      Comment


        #4
        Originally posted by theartfullodger View Post
        In circumstances like this quite likely/hopefully HMRC have already been informed of suspicious financial manoeuvres being plotted.

        Given your displeasure with your lender, why not just pay the mortgage off and close all accounts with them, job done?
        @ theartfullodger - Because the Building Society won't allow me to do so without proving where the funds came from!
        Informal advice from the Financial Ombudsman has encouraged me to make a formal complaint.

        @ jpkeates the lump sum payment was made from the bank account I have been using to credit the mortgage interest payment every month since 2011. I have savings accounts with four different organisations (RCI bank, Marcus, Aldermore, Woolwich) all of which I regularly move tens of thousands of pounds between the various accounts through my linked account and none of them have challenged any transaction.

        As I said above my solicitor confirmed the sale of five properties to the Building Society, but this wasn't sufficient for their Head of Financial Crime! To provide anything further would have involved solicitor costs and also the agreement of two third parties, and I simply wasn't prepared to do this for what I considered to be completely unnecessary at that stage.

        I also paid off an £80,000 mortgage with another building society the same month and all they needed was a verbal statement from me that the proceeds had come from the sale of a property.

        The FCA encourages lenders to "know their customer" which is what this Building Society should be activity doing. I disagree with you, and I suspect the FO will as well, but thanks for your post.
        Richard Oppé

        Informed, Independent and Honest Property Advisor

        Comment


          #5
          If you are really unhappy, you can make a complaint to the Financial Ombudsman :

          https://www.financial-ombudsman.org....es/2890/55.pdf

          Comment


            #6
            @ Gordon999 thanks and I am in the process of doing this. In order to make the complaint to the FO, I had to make a Subject Access Request to the Building Society for certain personal data, and, guess what, they were obstructive on this as well. I had to get advice from the Information Commissioner's Office and following a strongly worded letter they backed down. I now have little doubt I'm dealing with a collection of Jobsworths who overinterpret the regulations. Many thanks for your post.
            Richard Oppé

            Informed, Independent and Honest Property Advisor

            Comment


              #7
              I think you are blowing this up a bit why not I just send them completion statements to prove where you got the funds from job done

              although I get what you mean it is annoying when these things happen

              Comment


                #8
                @ blinko thanks for your post and whilst I could of course have done that I was told on the telephone by one of their staff that as Completion took place last September it was too long ago and therefore wouldn't count. Even their CEO agreed that was ridiculous.
                My money, my business what I do with it and if I decided to put the money from the sale into an interest account until the new tax year I really can't see what business it is of that Building Society?

                Also the BS has said that next time I make a lump sum repayment over £10,000 I will again have to prove where the money came from. So effectively they are accusing me of being a money launder until I can prove I'm not. Nothing in my mortgage agreement nor in any of their T&Cs force me to disclose the source of funds. Nothing on their website either.

                The thing that annoyed me most was that having given them sufficient information to satisfy their first enquiry, i.e. I had sold two properties mortgaged with them, and released considerable amounts of equity which they could check on Zoopla within two minutes, or the Land Registry in five minutes, that wasn't sufficient. So I then agreed for them to contact my solicitor who confirmed she had known me for years, and that I had sold 4 properties within the last nine months, that still wasn't sufficient, so they asked my solicitor for Completion Statements, at which point I took the view nothing would satisfy these jobsworth's. My solicitor would have required a payment to access the relevant statements from their vaults and deal with the matter. Why should I pay for that? So I withdrew my consent for my solicitor to deal with them.

                As I say it's going to the Financial Ombudsman, and yes of course I would like to dump being a customer of theirs, but that would involve me in finding a new mortgage at the age of 64. I took the mortgage out in 2005 the term is 20 years. It is interest only and allows overpayments. It has a floor of 2% which is why I wish to reduce it.
                Richard Oppé

                Informed, Independent and Honest Property Advisor

                Comment


                  #9
                  RichardO
                  You are not too old to obtain a BtL Remortgage , issues normally arise once you hit 69 years of age but below this you could get a mortgage to take to 85 or 90. Even for residential homeowner loans , there is an increasing number of lenders offering excellent mortgage products taking the borrower beyond 65 or 70 , these are called lending into later life.
                  I am glad you are fighting this lender via the Ombudsman and sincerely hope you obtain financial compensation for the trouble caused.

                  Comment


                    #10
                    I have some experience of moving money around and agree that this is being ridiculous. I would expect the financial ombudsman to award you compensation for your financial loss. Meanwhile I suggest you send them your copies of the completion statements and/or make overpayments of £9,900 per month, not sending statements means you could be held partly liable for the problem.

                    You could sue them in the small claims court for breach of contract. The Financial Ombudsman normally only awards peanuts in compensation and can take over a year to reach a decision.

                    Comment

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