Am i missing something here?

engineer_amy

Hi All


I would like to check im not missing some key point here as my bank tell me im wrong.


Im currently on a fixed deal due to end on 30th September 17 (2.5months from now)
Its £83K at 3.38% with an ERC of £2.5K
My bank tell me I can book a new fixed deal upto 3 months before my current deal ends, but the new rate will only kick in from the expiry date of the old rate ie 30th September.


I have already reached my overpayment limit for this year, and currently have 7.5k available to pay off as soon as this deal ends, I should have more saved in the next few months as well.


So ive been thinking that I allow my current deal to expire, pay off a lump sum overpayment immediately on 1st October, and pick up a new fixed deal then, hopefully at a better rate as I will have dropped my LTV to under the 75% mark. I can suffer a couple of weeks at the SVR until the new deal kicks in, although from experience my lender is very quick at arranging things, usually a week.


My bank however have called me a number to times to see if I have made a decision yet, trying to push me to book a new deal. I wont know what the exact rate is until I confirm, then they will do a valuation. I have advised them I have this lump sum payment to make and they just tell me it will take me over my overpayment allowances, both with the old deal and new deal. They say it wont have any effect on the rates or figures.


Surely they are talking rubbish, or have I missed something major?

xyz123

Your thoughts are correct. U can decide to stay on svr for 2/3 weeks. Advisor is probably keen to book something.

Just check you are pretty sure of dropping the LTV band (bank likely will do remote valuation using last price and some house price index. So LTV may or may not change. Secondly in that LTV that you ate hoping to get to, does bank actually have better products. Just as an example if going from. 90% to 85%, bank maynot have better rate for 85%.

If u post more details on terms of amount owed, lender name etc someone here can help further. Good luck

logie48

To be honest, if they are being like that, i'd likely be looking elsewhere. Not exactly looking after your best interests and more keen to get the deal sold. You are correct though, wait until the day after your deal expires and pay the lump sum. They cannot penalise you outwith the fix term, and then start the ball rolling with the new deal process from there. Explain this to the bank and tell them you will call them when you are ready to make the decision, rather than the other way about.

As xyz has said, you can check approximately which LTV band you will fall into and relate this to their product bands. But I think you'd be best crossing this bridge once you get the above sorted out, and you can sit down at the table from there.

Boredatwrork

Tell them your intentons and ask them to book an phone apointment for you for a date when you know the payments will have gone through by. Its all perfectly common, so just tell them your plans and they will get off your back

Gary123456790

Hi there,

One other method of making additional overpayments without charge is to ask if you can reduce the term of the mortgage - this increases the monthly payment but is often not classed as overpayments, so doesn't use up any overpayment allowance.

I used this when selling my old house as the ERC was a percentage of the outstanding mortgage - it can be very risky as if you want to increase for a few months then decrease you are reliant on the mortgage company making the change back to original term/payment amount in a timely fashion and they sometimes have a small window in the month to process this change or long lead time.

With our old provider it was around 6 weeks to get the term changed, but saved us a lot so worth looking into. They can also sometimes get sniffy about term changes, e.g. if you are anywhere near retirement for example they might refuse a term change so it is not for the feint hearted!!

Regards

amnblog

Santander by any chance?

There should be nothing to stop you paying £7,500 off the balance on the day after your current rate ends, with the new rate kicking into force on the same day.

engineer_amy

amnblog wrote: »

Santander by any chance?

There should be nothing to stop you paying £7,500 off the balance on the day after your current rate ends, with the new rate kicking into force on the same day.

No UlsterBank, although from the experience 2 separate family member have had with Santander mortgages, I wouldn't go near them with a bargepole.


I spoke with them today and asked them to ease off until I had made a decision, told them id be porting to another lender if they continued the 2 phone calls per day.


XYZ123 - They definitely do have cheaper products for the 75%LTV, all quite clear on their website, the only sticking point is the current valuation on my house. They don't use the Northern Ireland house price index as their valuation model, they told me they have their own model. And there hasn't been a house in my street on the market in nearly a year (most are older, settled people or younger couple in significant negative equity) so its hard to judge what they are currently going for.


Gary1234567890 - still young, only 32 so no issue on the term. I just like to maintain the flexibility of overpaying when I want, rather than being obligated to pay the fixed higher amount, but I do see the logic in your point.


I still have time to sort this, even if I do end up changing lenders. Time for a bit of research I think. I have a spotless credit file, excellent affordability and no other debt, so shouldn't have any issues getting a decent deal. im just lazy, if I stay with my current lender, I don't need to do anything other than tell them to proceed. they send me a code and I book my own deal online. Really could not be simpler.

ACG

They are saying if you pay a lump sum off once on the SVR you will incur early repayment charges? If that is the case, I would be 99.9% sure that is wrong - how would it differ if you cleared the full balance and left? Double check and speak to a manager if needs be.

Having worked for 2 banks, it does not surprise me that a call centre is giving duff info.