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

    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).


      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...


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