Another "deal ending" question

RainbowLaura

Hi everyone,

As I posted previously, my mortgage deal is coming to an end fairly soon and I am hoping to choose a new one as soon as I can. I can do this within three months of the end of my current deal. I have 36 years and 4 months left of the mortgage term at the moment. If I choose the new deal next month, with 36 years and 3 months left, what happens to the term? Do I make up the 3 month difference and the ultimate repayment date will be 36 years from the start of the new deal? Or will my mortgage still end in 36 years 3 months? What confuses me is the idea of transferring to another lender - the numbers naturally change by the day, so wouldn't they need a rounded number to work with so to speak?

Similarly, due to the interest over the month, the mortgage balance also varies by the day. Is it therefore best to select the start date of the new deal straight after the payment date, when the balance looks lower? Or would it not make a difference?

I am assuming that, especially if I stay with my current lender, the payment day won't change either (unless I ask them to)?

I am not sure if I am making any sense sorry, just another thing I am trying to get my head around!

Many thanks,

Laura

glosoli

If you are doing a product switch only with your existing provider and self selecting your own product, then the maturity date will remain the same. However if you go through an advised process it will depend on the advice given to you - they may recommend a change of term in line with your current circumstances. All an adviser can do is work on the figures as they are today, rather than what they will be in future.

If you are taking a deal from your existing provider generally you will be given a from to sign - you can either elect to have the product implemented during the three month period before the deal expires, or you can have it implemented upon the expiry of your existing rate. This obviously depends if the new deal is on a lower or higher rate of interest than your current deal. If your existing provider does not provide this option then it will just be implemented on the expiry of your existing rate.

Also the balance of your mortgage doesnt change day by day, as interest is applied monthly in arrears, however the redemption figure does. Interest only accrues on the capital balance outstanding.

In regards to payment date this will remain the same if you are staying with your existing provider.

RainbowLaura

Thank you glosoli for your helpful post. Having looked around, we are quite sure we will be sticking with our current provider but have an appointment with one of their own advisers to help us decide on the best of their products. This might be a silly question, but I assume we are allowed to go against their advice if we'd prefer something else? Not that we plan to, I just like to prepare for all eventualities

glosoli

Long story short yes you can reject the advisers advice if you want to and self select your own product.