Overpayment of mortgage when selling the house.

ddonq1412

My current situation, im in the process of selling my house. it was sale agreed on end of feb 2020 at 96k. I currently have seen a new property got offer accepted for 125k. was looking to use sale of my own property to fund a 45k deposit for the new property. I could not go to my current lender (bank of ireland) as i had a default registered against 4 years ago and has been paid off around 4 months now. So got approved for a new mortgage (halifax) i am wondering if i was to use a small bit of extra cash to pay off my current mortgage would it lower my fees, EG my EPC is at 4% ., outstanding mortgage is for 46k at present. i may be able to gather up to 3k to put at it. my bank does allow me to over pay by 10% each year.  My wife is hesitate to allow me to do this. I would be looking to give her the money to put back into our joint saving account when the house sale goes through. I currently see it in my mind, if  pay 2k off the mortgage. it would lower my fee on the EPC by 80 pounds roughly and would also mean each month going forward i would pay more capital probably about 2 pound each month also till sale is complete. The only draw back is if the house sale falls through i would not be able to return the cash to put back in savings but would essentially  shorten the mortgage term. that is currently at 18 years 5 months.

silvercar

You would make a small saving ads you have calculated, but in the current market I would be more worried about the sale falling through or you needing the cash for other things. Always good to have some rainy day money.
Are you sure your current lender won't consider porting your mortgage to the new property? That would save you 4%.

blue_max_3

I did just this! We were faced with paying 5% on outstanding balance when we sold and I elected to pay 10% off and saved that 5%. In fact, they worked out the 10% at the beginning of the year, so was a higher figure than actually owed. Made a few hundred quid for a phone call!
Obviously you need cooperation from your wife on this, but you can wait until exchange of contracts to make the payment. That's if you don't exchange/complete on the same day. If you have the cash in your joint account, you could use it and put the saving and capital back, so you both benefit.

ddonq1412

I have already been to them, as i  have a default in settled status they will only allow me to port my mortgage to the same value as my house sale. where i would be nearly 30k short on what i need. There lending criteria does advise of a clean record, so i would have to wait 2 years for the default to come off my credit report before they would entertain me for a new mortgage. its a shame i and wife both bank and had previous loans from them. currently have 2 credit cards with them. but we stopped all transactions on their products apart from mortgage. i put the exact amount into account to pay mortgage now. and cleared the both credit cards. 

ddonq1412

blue_max_3 said:

I did just this! We were faced with paying 5% on outstanding balance when we sold and I elected to pay 10% off and saved that 5%. In fact, they worked out the 10% at the beginning of the year, so was a higher figure than actually owed. Made a few hundred quid for a phone call!
Obviously you need cooperation from your wife on this, but you can wait until exchange of contracts to make the payment. That's if you don't exchange/complete on the same day. If you have the cash in your joint account, you could use it and put the saving and capital back, so you both benefit.

Can that be done, when i sign the contract for house i could make the additional payment. what if sale of house falls through after that. or can that happen if its already be signed on. 

blue_max_3

ddonq1412 said:

blue_max_3 said:

I did just this! We were faced with paying 5% on outstanding balance when we sold and I elected to pay 10% off and saved that 5%. In fact, they worked out the 10% at the beginning of the year, so was a higher figure than actually owed. Made a few hundred quid for a phone call!
Obviously you need cooperation from your wife on this, but you can wait until exchange of contracts to make the payment. That's if you don't exchange/complete on the same day. If you have the cash in your joint account, you could use it and put the saving and capital back, so you both benefit.

Can that be done, when i sign the contract for house i could make the additional payment. what if sale of house falls through after that. or can that happen if its already be signed on. 

The exchange of contracts is when a 10% deposit is paid. There are penalties for not completing at the agreed date of completion and ultimately, the loss of the deposit. So, it can, but rarely would.
And yes, you can choose any time to make the overpayment, however, bear in mind that it may be difficult to contact the lender. Easiest money I've ever earned. And tax free!

ddonq1412

bank of Ireland has a online website to submit the payment so wont need to call them up. time to see where my house sale is at. Lockdown in NI has been extended another 3 weeks.