Yes, if a borrower nominates the wrong direct debit account, they will be charged a missed payment fee. A direct debit works well for mortgage repayments and other recurring bills, but if your client doesn’t provide the correct account number, the lender can’t take any money from the account to pay the bill, resulting in a fee.
Basics of direct debits
Some lenders may require your client to have a direct debit to secure a loan. This is because they cost less for a bank to process than a cheque or other type of online payment. One of the benefits of having your client use direct debit to make mortgage repayments is that it is an excellent way for them to manage repayments, especially if they are forgetful, busy, or don’t manage money well. However, if they don’t have enough money in the account or provide the wrong account information, they are at risk of paying late fees.
Information your client should know
If your client signs up for direct debit mortgages repayments, they must check both their bank statement and their mortgage statements regularly to ensure that the lender is receiving their direct repayment. If their automatic mortgage repayments are not being processed and they are charged for missed payments and other late fees, your client needs to discover this early on. The longer they wait, the more they are paying in late fees and the increased chance they have of defaulting on their mortgage entirely.
If you or your client have questions about direct debit o mortgages repayments, the experts at Mortgage Street can help. We are a non-bank lender specialising in home loans. Our team of broksers is knowledgeable in all aspects of the home buying process, and we serve as a professional resource for mortgage brokers.