I must pay £350,000 to my solicitor to purchase a home however my financial institution will not let me switch greater than £25,000 a day: How do I do it?

My husband and I are in the process of buying our first home. 

The property we are buying is in London and worth £725,000. We have a joint bank account with Lloyds where we have consolidated all our savings and the gifted funds from our parents to the grand total of £350,000. This comprises a 40 per cent deposit and will also pay for the £26,250 of stamp duty, the legal fees and the survey.

We need to transfer £72,500 to our lawyer on exchange and then the remainder when we complete. However, it’s suddenly occurred to me that our bank transfer limit is £25,000 a day. 

Do we really need to bank transfer to our solicitor £25,000 a day? That will require 14 daily payments over two weeks. We could go to a branch, but even then the maximum is £100,000.

Do all banks operate with these limits?

Ed Magnus of This is Money replies: This is a problem that has impacted many people. Lloyds Bank’s daily transfer limit is not out of kilter with other banks.

With all the stresses and bureaucracy involved with buying a property, the last thing you want to do is have to log on to internet banking every day for two weeks and make payments – or spend time queueing in a branch. 

If that money is in an account earning interest, you’ll also want to leave it there for as long as possible. With such a big sum, even a few days can make a difference. 

What are other banks’ limits? 

HSBC also limits online faster payments to no more than £25,000 a day, as do Halifax, TSB and Santander.

Barclays is slightly more relaxed with a £50,000 daily cap, First Direct has its daily limit set to £49,999.99, while NatWest, RBS and Virgin Money all allow up to £100,000 on each given day.

It’s worth pointing out that with Lloyds, the limit for a one-off payment in a branch is £250,000, not £100,000 as you thought. 

This is much more generous than some of the other high street banks. For example, NatWest’s in branch limit is £20,000 and HSBC’s is just £10,000, according to Pay UK.

While banks have these limits in place to clamp down on fraud, it can be frustrating for customers going about their business. 

However, there is a solution that could allow you to avoid visiting a branch or making a bank transfer everyday for two weeks.

What you are trying to do is what’s known as a faster payment, which is typically the near-instant payment method we use for everyday transactions.

While it is technically possible to send faster payments of up to £1million using the faster payments system, many banks set their own limits.

The alternative option is to make what is known as a Chaps payment. Unlike faster payments, these typically have no upper limit and are typically used when making urgent or large payments.

Chaps is short for ‘clearing house automated payment system.’

You can typically send a Chaps payment in a branch but many banks allow payments to be made over the phone or by post. 

Lloyds Bank charges its customers £25 for making Chaps payments. Santander also charges £25, as does Halifax and Virgin Money, while TSB charges £30. NatWest charges £23 – or £21 if paying another NatWest account.

Meanwhile, HSBC and Barclays don’t charge for Chaps payments.  

Challenger banks allow for the biggest faster payments

Some of the newer app based challenger banks make life much simpler for anyone looking to transfer a vast sum of money.

These challenger banks don’t have branches, but can be more relaxed when it comes to maximum daily payment limits.

They typically have a lower limit of £10,000 to £25,000 a day, but with the ability to request an increase to £500,000 or even £1million via the app. This can be done by just opening the chat within the app.

Starling and Monzo all allow their customers to increase their daily limit to £1million by using the app, according to Pay UK, though individual account limits may apply.

Chase says it can allow up to £2million to be transferred as a faster payment in one day. While its normal daily limit is £25,000, it is possible to request up to £2million by messaging on the app or calling them two business days in advance of the payment.

Monzo, which has a daily limit of £10,000 offers its customers the ability to request a limit increase through the app on a given day, although it says its higher value specialists will then decide whether to approve or decline with anything over £50,000 likely to be under scrutiny.

What did Lloyds Bank say?

We contacted Lloyds Bank regarding our reader’s question. 

It said its payment limits are set to balance convenience with fighting fraud and meeting AML (anti-money laundering) requirements, so the higher the amount the more stringent the checks. 

Lloyds said it’s not just about checking the customer’s ID, but also that they have taken steps to ensure they have validated the recipient and their account details.

For transfers over £250,000, Chaps is the payment method it recommends. This needs to be done through a branch and there is a £25 fee. 

You can make an appointment with the branch to do this. It takes about 20 minutes.

In terms of an individual solution, they suggested our reader make smaller transfers online for the deposit, but the larger balance of the purchase costs and SDLT would be simplest via one Chaps payment  – which until faster payments came in, was the standard method for all housing transactions.

A spokesperson for Lloyds Bank said: ‘We have payment limits in place as one of the ways we protect customers from fraud, including while they are buying a home. 

‘We have limits that balance day-to-day convenience with the right level of security for the size of payment.’