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  • FIRST POST
    • Leon12
    • By Leon12 29th Nov 17, 5:53 PM
    • 17Posts
    • 1Thanks
    Leon12
    Re-mortgaging and Paying off Old Lender
    • #1
    • 29th Nov 17, 5:53 PM
    Re-mortgaging and Paying off Old Lender 29th Nov 17 at 5:53 PM
    Hello,


    I have a quick question that has been confusing me about how an old lender is paid off when re-mortgaging. I have tried to give a simple example below in which I think I have this correct but would appreciate confirmation of this / your thoughts please. So:


    If after a 2 year fixed term mortgage I have an outstanding mortgage balance of £140,000 and I want to re-mortgage to a new lender to take advantage of lower interest rates how does the original lender get their remaining £140,000 back?


    Am I correct in saying the new lender would give me the £140,000 on approval, I then give that to the old lender and I then owe the new lender the £140,000 - Is that correct?


    I know in practice this would probably go through a Solicitor and there would be additional costs involved as with the initial mortgage application but in the simplest terms is this how it works or is there anything I am missing?


    Many thanks,


    Leon
Page 1
    • Thrugelmir
    • By Thrugelmir 29th Nov 17, 5:56 PM
    • 56,196 Posts
    • 49,574 Thanks
    Thrugelmir
    • #2
    • 29th Nov 17, 5:56 PM
    • #2
    • 29th Nov 17, 5:56 PM
    As simple as you describe. New lender takes on ownership of the debt owed.
    “Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble”
    ― Warren Buffett
    • kingstreet
    • By kingstreet 29th Nov 17, 6:23 PM
    • 32,366 Posts
    • 17,376 Thanks
    kingstreet
    • #3
    • 29th Nov 17, 6:23 PM
    • #3
    • 29th Nov 17, 6:23 PM
    Yes.
    I know in practice this would probably go through a Solicitor and there would be additional costs involved as with the initial mortgage application but in the simplest terms is this how it works or is there anything I am missing?
    Originally posted by Leon12
    Often, the legal fees are met from a cashback or are paid for by the new lender.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
    • davidmcn
    • By davidmcn 29th Nov 17, 6:23 PM
    • 6,259 Posts
    • 6,038 Thanks
    davidmcn
    • #4
    • 29th Nov 17, 6:23 PM
    • #4
    • 29th Nov 17, 6:23 PM
    Am I correct in saying the new lender would give me the £140,000 on approval, I then give that to the old lender and I then owe the new lender the £140,000 - Is that correct?
    Originally posted by Leon12
    Basically yes, though the money all goes through the solicitors.
    • Leon12
    • By Leon12 30th Nov 17, 11:28 AM
    • 17 Posts
    • 1 Thanks
    Leon12
    • #5
    • 30th Nov 17, 11:28 AM
    • #5
    • 30th Nov 17, 11:28 AM
    Thanks everyone - Very helpful as always and good to hear that I was correct in my thinking.


    Cheers,


    Leon
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