Remortgaging Queries

spiidey

We're in the process of looking for a deal for a remortgage and the best on offer (all things considered including access to the 123 current account) is the following product on offer from Santander (from their website):-

Product: 2 year fix @ 2.44%
Booking Fee: £995
LTV: 70% max

Additional Benefits:- Free valuation and standard legal fees paid.

Doing the same search on Money Supermarket brings up the same product, with slightly different wording for the "Additional Benefits", as follows:- "Cashback: £250 paid to you on completion".

We're with RBS at the moment and our current deal expires on 30/4/13. We have just over £175k principal outstanding on a £250k valued property.

We've got the 90 minute mortgage appointment booked for over the telephone on Friday.

Quite a few queries:-

A. When we called Santander direct to enquire about the mortgage, they mentioned we had two options re the "Additional Benefits":-

1. A free valuation and standard legal fees paid but no cashback; or
2. A free valuation and £250 cashback but we would have to pay the legal fees.

Which of these two is the best option both in terms of outright cost and potential risks?


B. There is a chance we could get a c. £5-10k windfall between now and the point where the mortgage would be ported across to Santander. At what point in the process between now and 30/4/13 will the lending amount be locked down? i.e. could we agree with Santander a maximum lending limit of £175k on the basis that we could port either that across or a lower amount if need be (i.e. £170k/£165k)? Or do we need to agree the lending amount outright i.e. if we agree £175k it has to be £175k?


C. The principal outstanding on the mortgage is just over the 70% LTV ratio at the moment; however we have two further loan repayments with RBS prior to 30/4/13 therefore we'll be just under the 70% LTV ratio (I calculate we'll be at c. £174,800 on 30/4/13). However, adding the booking fee of £995 to the mortgage would then take us back over the £175k to c. £175,995.

How do lenders (and Santander in particular) calculate the LTV % in terms of eligibility for certain products - is it pre, or post, addition of the Booking Fee? Of course all of this assumes our house will remain valued @ £250k.


D. As our existing mortgage product runs to 30/4/13 and we'd have to pay an ERC if we switched to another lender prior to this, at what point in the process can we give Santander the go-ahead to port us across without incurring an ERC? i.e. what is Santander's turnaround time assuming we pass the credit checks etc.

kingstreet

Choice of free legals or cashback is up to you. Do you have a solicitor you want to use, if so, find out what they charge.

You apply for the mortgage amount you need. If you need to reduce it, you can do it any time until completion by asking the lender. A new mortgage offer will be issued.

Take care around the LTV issue. Make sure you'll have enough money to repay the existing mortgage. Don't forget at one point in the month, the redemption figure will be at its highest, at another, the lowest. The solicitor is responsible for arranging the funds and repaying the existing mortgage. You tell him when you want to complete to avoid ERPs.

Base your estimate of the property value on recent sold prices for comparable property. That's what the lender, or its surveyor will do in valuing your property.

spiidey

kingstreet wrote: »

Choice of free legals or cashback is up to you. Do you have a solicitor you want to use, if so, find out what they charge.

You apply for the mortgage amount you need. If you need to reduce it, you can do it any time until completion by asking the lender. A new mortgage offer will be issued.

Take care around the LTV issue. Make sure you'll have enough money to repay the existing mortgage. Don't forget at one point in the month, the redemption figure will be at its highest, at another, the lowest. The solicitor is responsible for arranging the funds and repaying the existing mortgage. You tell him when you want to complete to avoid ERPs.

Base your estimate of the property value on recent sold prices for comparable property. That's what the lender, or its surveyor will do in valuing your property.

Thanks for the reply.

We don't have a "preferred" solicitor. What is typical going rate for legal fees for arranging a remortgage, or is it so variable that its impossible to quantify?

At what point during the month is the mortgage (redemption figure) highest and lowest? Presume highest day before any mortgage payment is made, and lowest on the day the mortgage payment is made?

kingstreet

No set figure for remortgage. Have a ring around and find out in your area.

Redemption cost is highest on day interest calculated and added to account, before payment is made. Lowest would be day after payment.

Solicitor obtains redemption statement with figure based on provisional completion date given to lender.

Perelandra

Won't the "Free legals" refer to the lender's legal fees for a remortgage? In which case it should be easy to ask what fee they'd charge you if you were paying their legal costs.

There's no need to use a solicitor at all, on your side, for a remortgage unless you want a solicitor to look over the terms of the mortgage itself.