Remortgaging for less than existing mortgage

beefturnmail

Hi,

I'm in the process of remortgaging. The amount I've requested to borrow is less than the outstainding balance with my current lender (I have a substantial amount of savings which I am planning on using to cover the difference).

My question is how will this work in practice? When the mortgage completes, will I then get a 'bill' from my existing lender for the outstanding balance, or will I have to make sure that my current lender has the outstanding balance before completion? - if so how will I know exactly how much I need to pay?

Thanks

getmore4less

same or different lender?

holly_hobby

A remortgage involves a change of lender ....

H

beefturnmail

Thanks,

Yes it's with a different lender. I tried going through a broker (London & Country). Not saying all brokers are the same but they didn't really listen to what I wanted (which was to use my savings to pay down the mortgage and unlock deals on a lower LTV), and came up with a recommendation which I could easily better from a number of different lenders, after looking around for half an hour myself. (I suspect becasue they were only looking for deals at a higher LTV)

I consider myself fairly financially savvy and I didn't go through a broker when I got my first mortgage as a ftb, so I'm comfortable doing it alone - I just like to be prepared for the details as I've never been through a remortgage process before.

kingstreet

It wouldn't be the first time the word "remortgage" has been used by someone describing a product transfer or change to a customer retention product.

However, in this case I'm pretty certain there's a change of lender involved, otherwise the OP simply makes a lump sum overpayment before taking up any new rate from his/her lender.

Crossed with OP's last post.

harvey115

You are on the right lines.

You need to do the calculations yourself to find out your LTV:

- What is the house value
- What is the remaining mortgage amount
- How much savings do you want to use?

Once you have the correct number/LTV in mind look for the deals online. I believe you have just done this.

You may also need to keep in mind that there might be some charges by your current lender i.e. if you are in a fixed deal, completion fees etc.

Just call your lender and check how much will you owe them if you were to settle the account in a week or a month time to get an idea of any added charges/fees.

Apply with the LTV to a new mortgage provider and appoint a solicitor. disclose the details on your old mortgage amount, new mortgage amount and the savings you are putting in. All should be fine.

getmore4less

holly_hobby wrote: »

A remortgage involves a change of lender ....

H

A remortgage does not have to involve a new lender.

allthough this one does, missed it in the first post.


Another simple solution if outside penalty period is overpay to the level you want and save a bit of interest along the way and avoids the timing issue making the money available

kingstreet

getmore4less wrote: »

A remortgage does not have to involve a new lender

I've been wrong for twenty eight years then. I belived the term remortgage was used where a new mortgage deed would be required and I didn't know of a situation where a new deed would be needed by the existing lender.

holly_hobby

No Kings, you don't need me to tell you that you're spot on ...... albeit to be fair we should know the correct terminology being industry profs.

For the benefit of those who aren't clear ..

In essence you can not remortgage to an existing lender, as they already hold registered charge !!

If staying with the same lender and seeking a change of mge product, that is simply a product transfer.

Seeking additional finance with the existing lender - obviously thats technically just a further advance with charge revision as appropriate (which may of course be also accompanied by a product transfer).

Technically correct - a remortgage involves the removal of a legal charge by 1 mge lender, to be replaced by that of a another as 1st chargee .. and it always has been .....

I'm not picking holes ... but its always important to get the terminology right for readers/the OP, who in this case did correctly state in their initial post that this was a remortgage enquiry .. i.e as she is looking to switch to a different mge provider.

Now ... back to some positive assistance for them ...

Hope this helps

Holly

getmore4less

[STRIKE]apples to change of product or extending borrowing.
[/STRIKE]

Ok I bow to the strict interpretation.