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Mortgage Advances and Cleared Funds

House purchases are usually completed by us sending cleared funds to the seller on the day of completion. We send a telegraphic transfer - a direct transfer from bank account to bank account on the day of completion. We must have cleared funds available on that day. If we do not, then we would have, in effect, to borrow funds from other clients to complete your purchase.

We must clear any balance received from you. We will try to let you know the amount well before completion, but if you wish to pay by cheque, then this must be received at least ten working days before completion. If not, we will have to 'specially clear' the cheque. Even so, we will still require four working days before completion, and there will be an additional charge payable for this including extra fees paid to our bank.

A lender's bank draft must be cleared as must any other cheque. We therefore ask your lender to telegraph the money to us on the day before completion. If the lender does not provide telegraphic transfers then we must ask for the advance cheque four working days before completion and, again, specially clear it. If the lender is itself a clearing bank, then the cheque can be specially cleared in two working days. In any event the special clearance will again involve additional charges.

More importantly, the lender will normally seek to charge you interest on the mortgage advance, not from the day on which the money leaves their account, but from the earlier date, when they either send out the cheque or otherwise.

At it's simplest, the lenders charge you interest, for the several days before the money actually leaves their account. This is an issue between you as borrower, and them as lender. It is out of our control.

Please note that this is not a question of trust or distrust. It is simply an issue of whether, when we pay money out, we have it in the account. Note also that a bankers draft provides for certainty of payment, but remains otherwise a cheque. It must be cleared in the normal way.

If you have any questions about this matter, please do not hesitate to contact us.

Important: Please note that our law-bytes are retained for archival purposes only. The law changes, and these notes are often, now, out of date. You must take direct advice on your own personal situation and the law as it currently stands.
All information on this site is in general and summary form only. The content of any page on this site may be out of date and or incomplete, and you should not not rely directly upon it. Take direct professional legal advice which reflects your own particular situation.
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18 October 2013 146 18 October 2013