Lump sum in a week between old and new fixed rates

icre8tive

Not sure how this will work or who to ask really, so i come to MSE ...

I have a lump sum to pay off my mortgage. I am in a fixed rate with HSBC until Sept 30 and want to reserve ( 6 months in advance ) a fixed with First Direct now (to beat any rate rise).
So drawdown would need to be early Oct (before the 6 months runs out) not leaving me much time.

Question - which provider do I pay the lump sum to in Oct and how long would this process take, as I might only have 5 working days to work this out, I think?

With or without lump sum I am still in the 65% LTV level for FD deal.

I don't want to end my rate early I just want to get my lump sum done inbetween, so the new payments are more favourable with FD.

Sorry if this is no very clear, this is my first post, pls help?

dimbo61

If you have everything set up IE the lump sum in a HSBC bank account and the new mortgage with FD set up to transfer the funds on the day after the fix ends you should have no problems so get yourself sorted

Crashandburn

Have you used your overpayment allowance this year with HSBC???? If so, throw in part of the savings now up to the limit without incurring penalties as per your mortgage offer unless you have stupidly low rate on the current HSBC deal against savings rates

icre8tive

Yep used it all up.

kingstreet

I assume this is still classed as a remortgage, despite the lenders being one and the same?

If so, why not just wait for the solicitor to tell you how much you need to give them to make up the difference on completion day?

noodle

If your early payment penalties are calculated using HSBC's current formula (1% for every year left on the fix, pro-rata), they would only be about 1/2 a percent, and so you could save much more in interest than you'd pay as a penalty by making the lump sum payment now than waiting until the end of your deal.

icre8tive

I will ask HSBC tonight about how much it will cost to make the 15,000 lump sum payment now instead of 30th Sept, to see if it would be reasonable fee. Thanks Noodle

I did think that when I apply for 80,000 instead of the 95,000 needed they (first direct legal team) would call me and ask for the difference - but having never done this before, I wasn't sure if it would be the case. You think it would be? Thanks Kingstreet

kingstreet

icre8tive wrote: »

I did think that when I apply for 80,000 instead of the 95,000 needed they (first direct legal team) would call me and ask for the difference - but having never done this before, I wasn't sure if it would be the case. You think it would be? Thanks Kingstreet

Assuming this is a remortgage (complicated by the fact HSBC and FD are one and the same) FD will employ a solicitor to handle the mortgage transfer. My instinct suggests a change of mortgage deed will be required, so this is a remortgage, rather than an internal product transfer.

During the process, the solicitor will establish how much is coming from FD and how much needs to go to HSBC. You will then be asked to provide the difference.

As you only want to have a short window and not risk penalties for repaying early, this would be the perfect solution. You'll get a completion statement from the solicitor which confirms what you need to pay to the solicitor, to the penny, based on the agreed completion date. All you have to do is get the money to them for that date.