Remortgaging: can I put down a lump sum?

breaking_free

House prices have jumped up ridiculously in the year and a half since I bought my place. The result is that my loan to value ratio has become more favourable: it's under 60%, which is when the really low interest rates kick in.

I'm currently with Leeds Building Society: 5 year fixed, 2.74%
The mortgage exit fee is £199.

I'm looking at jumping ship to HSBC: 5 year fixed, 1.94%.
There is no booking fee (I don't know about valuation fees or solicitors fees yet, so that could be a deal breaker), but if I only have to pay the £199 exit fee with Leeds it's a no brainer.

But here's my BIG question. I sold my overseas property and now have a large sum of cash.
Would HSBC (or any mortgage provider) let me remortgage with them AND pay that lump sum in at the outset (thereby massively reducing the principal)?

Has anybody done this or has knowledge about whether it's possible?

amnblog

You are simply borrowing less with the new lender and paying off some of the old mortgage in cash simultaneously.

Absolutely no problem with that.

breaking_free

Woot woot!

Hope you're right amnblog (but as your signature says you're a mortgage broker, and that I need to take your word for it, I'll do just that)

Happy days.

AnotherJoe

Its not really a "big question" OP.
You are just taking out a new mortgage with HSBC.

People do this all the time, take out a new mortgage thats a different size to the old one. They do it when they move house and buy bigger, or when they are downsizing and releasing money. The fact you aren't moving house just makes it easier and cheaper.

It can be any size you want that is affordable under their rules. Smaller, bigger, exactly the same, doesn't matter if you meet their criteria. (with the proviso that there might be a minimum amount - many lenders dont like mortgages under about £30k for example)

Dingo12

You might also want to see if HSBC (or someone else) offers an offset mortgage on the same rate. This way you can keep hold of the lump sum as savings but get the benefit of saving interest on your mortgage.

breaking_free

Thanks guys and gals.

I've run an Internet search on remortgages with no booking/arrangement fees and HSBC comes up trumps. Booked an appointment to speak to a mortgage adviser next week so will let you know how I get on. Mortgage free in another 7 years if I'm lucky:j woot woot!

HarryHotspur

Are you sure that there are no early repayment charges for leaving your 5 year fix early?

mrmajika

breaking_free wrote: »

I'm currently with Leeds Building Society: 5 year fixed, 2.74%
The mortgage exit fee is £199.

Leeds BS have an exit fee of £199, but there are also early repayment charges on their fixed rate mortgages. Unless you have some legacy deal that offered no ERCs then you could find that the ERC will negate any savings you make by switching.

getmore4less

this is from a current leeds 5y deal
10% capital repayments are allowed each year during the fixed rate period without incurring an Early Repayment Charge.
Tapered Early Repayment Charges apply up to and including 30 Apr 2022

The tapered ERC actual charges are not mentioned anywhere I can find.