Direct Debit Indemnity

Help
1

Hi,

I’m currently talking to a chat representative on Monzo about Direct Debit Indemnity.

Basically my mortgage lender is charging me even though I’m changing to a new lender on the 1st Sept so I’ll be a lot of money out of pocket. My old lender advised me to ask for a Direct Debit Indemnity as it’s the quickest way to get this money back as they can’t stop the Direct Debit process.

The chat representative is asking for proof that this is what they said, am I wrong here or under the DD Guarantee should they not just refund the money no questions asked?

Cheers,

Karl

2

Isn’t it normally done after the payment is taken? Instead of before?

Also, I’ve always been told not to stop payments if I’m changing mortgage provider etc and the old one will refund overpayments etc.

So make sure you have it in writing to cover yourself tbf

Also, the new lender tends to skip the first month of payment & not take payment till the 2nd month.

3

I believe they should refund you on your head be it; but I think advisors tend to always be cautious with these things / have poor understanding of the rules.

But as @michaelw90 says that is done after the payment. Before the payment you can just cancel the DD, but again on your head be it.

If you can afford to be without the money for a while I’d let it go through less it results in an accidental missed payment mark.

Edit: see here on how claims work.

4

I would not risk cancelling a DD for a mortgage.

Go back and speak to the lender.

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5

Yes I was just making sure I had everything ready to go.

I’m not cancelling the DD. I wouldn’t care normally but because of the interest rate rise the payment is nearly 60% more than normal toppled with the fact we’re on maternity pay at the moment I need that money back asap.

6

For clarification I know they’re going to charge me because Monzo has told me so.

They can’t stop the DD their side as it’s already in the works. I’m changing product to another lender on 1st Sept so I don’t owe them anything.

I’m just waiting for them to take the money and then get it back as they said a refund could take 10 days which I can’t afford to wait that long.

7

Surely you still have to pay the previous lender up until 31st August? Or are mortgages paid in advance?

While an instant and immediate refund is applicable under the guarantee, being an essential payment which can have severe impact, monzo are possibly trying to mitigate any damage, in your interests.

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8

Mortgages are paid in advance, I moved in on 16th August 2021 and on 1st Sept 2021 I paid 1 1/2 months despite me only living there for 2 weeks at the time.

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9

Have you got a letter from your new lender to find out when the payment due? There’s definitely a trend where many skip the first month payment.

10

Not yet, it all goes through 1st Sept.

But that’s irrelevant tbh. I already know my 1st payment for the new lender is 1st October, but I can’t afford the 60% on top of what I already been paying. My SO work didn’t tick the box that said she get’s maternity pay so we’re already nearly £550 down for the month. So not an ideal situation.

11

Just cancel the direct debit instruction now and the direct debit won’t go through.

You can do it yourself on the payments tab on the app.

12

I’m not cancelling a DD to do with my mortgage. No point risking an issue on my credit report.

13

That’s what you are asking Monzo support to do: it makes no difference if they do it or you do it, the mortgage bank won’t get the money. If that is likely to cause a problem, you shouldn’t ask Monzo to cancel the transaction

4 Likes
14

Raising an indemnity is the same, you’re reversing a payment which has the same outcome.

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15

Has your solicitor not confirmed everything for you?
You might find that the payment in September has been used as the redemption estimate?
If you over pay the value you will receive a refund it might just take a couple of weeks.

When I recently changed I purposely chose a date not near payment date so to avoid this issue.