What's the best day to complete a mortgage switch?

20vt-rs

Hello...

I'm in the process of completing forms and setting up my mortgage transfer from one lender to another, to take place later this year. My fixed rate expires on the 30th of Sept and payments from 1st Oct onwards incurr zero penalty. However, my direct debit comes out on the first of each month as well, so would it be better to complete the transfer after this direct debit date, say the 5th oct or is 1st oct safe?

Thanks...

Thrugelmir

Are you concerned about paying your existing lender in October whilst effecting the switch?

kingstreet

Ask solicitor to complete on 1 October. Redemption figure solicitor gets from current lender is based on last payment being made on 1 September.

Make sure solicitor knows early repayment penalties don't end until 30 September and NOT to try to complete until penalties expire. Check redemption figure with them for 1 October to ensure penalties are missing.

Once you are happy completion will take place as you desire, around a week before, cancel your direct debit to prevent the payment for the old mortgage being taken on 1 October. If completion doesn't take place for some reason you can call the lender and make a payment by card over the phone if you are worried about a late payment on your record.

First payment for new mortgage may only be a couple of weeks after completion, with first regular payment due on 1 November. So the payment you don't make to the old mortgage on 1 October, you may make on new mortgage on, or around, 14 October.

Actual payment date will be confirmed in writing as soon as completion take place. Banks tend to collect in arrears, building societies and former building societies in advance.

20vt-rs

Thanks for the info guys, I was more concerned about the old mortgage being redeemed and then a DD being taken and going into a hole! So my thoughts were compete a few days after the regular DD takes place...

Something else I've been asked is if a want a copy of the deeds once it's all done, solicitor wants £20 for this. Im not sure if I need this or not, as I am signing these and sending them back should I just copy them first or is that too simple?!

Wh05apk

If you complete on 1st October, your first payment to the new lender will not normally be until November, but could be nearly double.

DO NOT cancel your DDR until completion confirmed, incase for any reason completion is delayed, otherwise you could end up showing as having made a late mortgage payment (financial suicide!) if the DDR is taken, after the mortgage is closed, it will be returned promptly in time for your payment to the new lender.

kingstreet

Just to give an idea of how some lenders operate, here's an example of the Halifax "first payment" guide;-

First and subsequent payment collection dates

Depending on when in the month you take out your mortgage, we will collect your initial interest, together with your first and subsequent payments as follows:

• Mortgage taken out on 1st-9th – we will collect initial interest 14 days after the date of your mortgage. We will then collect your first monthly payment on your preferred payment date in the month following the month during which you took out your mortgage. We will collect subsequent monthly payments on your
preferred payment date each month after that.

• Mortgage taken out on 10th-17th – we will collect initial interest and the first monthly payment on your preferred payment date in the month following the month during which you took out your mortgage. We will collect subsequent monthly payments on your preferred payment date each month after that.

• Mortgage taken out on 18th-31st – we will collect initial interest and the first monthly payment 14 days after the date of your mortgage. We will collect the second monthly payment on your preferred payment date in the 2nd month following the month during which you took out your mortgage. We will collect subsequent monthly payments on your preferred payment date each month after that.

As Wh05 said, other lenders may not collect a payment until 1 November and that may be for almost two months' payments at once.

20vt-rs

Thanks for the info guys, I've decided to let the DD go on the 1st of the month and will allow 10 working days for this, so completion is scheduled for after that period or sooner if possible.

getmore4less

The trick is to make sure you have the cash flow funds available that needs to be 1 extra payment and upto 2.

That way if timing goes wrong there is time to recover an overpayment from the old lender and meet a large first payment from the new.

one way to do this if you don't have them, as long as LTV not effected and you have a penatly free overpayment, is to borrow these on the new loan.