Remortgaging without an early repayment fee

aroominyork

My daughter has a mortgage with Santander which runs to May 2022 at 2.09%. They are currently offering 0.99% for five year deals which she wants to move onto, and she is concerned rates might rise soon. I believe there is a fee for changing your mortgage more than four months before it ends (though I have not studied the exact wording). Do banks sometimes waive the early fee so she could switch now, and are there any tips for how to convince them to do so?

[Deleted User]

Highly unlikely. The fee is contractual and reflects the costs that the lender incurs due to early redemption. 

But your starting point is to see if there is a fee and whether it's worth waiting, which it most likely will be.

aoleks

Plenty of banks allow you to remortgage 6 months in advance, but thwt takes you into December, which is just around the corner. Rates will not go up that quickly, I suspect it’s another 2-3 years until we start seeing some significant increases.

kingstreet

She can apply for a remortgage and get a formal offer which will last until the early repayment penalties expire in May next year. She should do this in November/December as typically the offer expires after six months.

However, she seems to be considering existing lender customer retention products and these have different terms depending on the lender concerned. She should check with Santander when she can request a "product transfer" she wants to take effect in May.

getmore4less

According to the blurb Santander 

https://www.santander.co.uk/personal/mortgages/existing-customers
https://www.santander.co.uk/personal/mortgages/existing-customers/change-your-mortgage

Retention deals for a customer come up 4 months before the end of product that is likely to be the Jan time frame for a May.2022

they also say you can switch up to 4 months early as well.

put that date in the calendar and watch 

If the previous was a  5y fix, ERC is probably 5% no way to recover that witching early

aroominyork

Thanks all. The next question will, understandably, be "I am not interested" territory for many of you.

When she bought her property we gifted her a chunk and loaned her another chunk of money. To get the mortgage we said (and signed) that it was all a gift. Her salary is now high enough that she could take out a larger remortgage to include the extra money to repay us. That would suit us - we would get our loan back and she would own her place outright. But presumably the mortgage company (Santander or whoever she switched to) would ask why she wanted the extra cash. How could she navigate this?

[Deleted User]

By going back in time and not making false declarations to get a mortgage.  The irony is that you could have told this particular lender the truth that it was a loan and they would have had no issues with it.

An actual option is that she is registered for online banking and she can apply for additional borrowing on the mortgage at any time without speaking to someone.  She can then select whatever option she wants to say the money is for

aoleks

You want to re-decorate? Build an extension? Buy a car?

banks don’t care, they’ll be happy to lend you money if you can afford it.

grumiofoundation

aroominyork said:

Thanks all. The next question will, understandably, be "I am not interested" territory for many of you.

When she bought her property we gifted her a chunk and loaned her another chunk of money. To get the mortgage we said (and signed) that it was all a gift. Her salary is now high enough that she could take out a larger remortgage to include the extra money to repay us. That would suit us - we would get our loan back and she would own her place outright. But presumably the mortgage company (Santander or whoever she switched to) would ask why she wanted the extra cash. How could she navigate this?

So as above you made a false declaration to the mortgage company. 

Presumably she was also aware this was a false declaration? If she wants to pay back this ‘loan’ (technically gift you the same amount back) that’s her choice, and if eligible for a larger remortgage that would be one option. Would an alternative that wouldn’t involve remortgaging that she could just gift you money monthly from the salary. Or do you need the cash? 

Obviously the more cyclical way to look at this is it that she may feel her only option is to take out more debt to pay back a ‘strings-attached’ gift…

As you (albeit falsely) said it was a gift she owns her place outright now. You don’t own any of it - if you wanted to own some of it you shouldn’t have gifted the money. 

getmore4less

BY making it a gift you also have that as a PET transfer on your estate.

She will have a PET on hers when she gifts it back.

Extending borrowing will probably have more hoops to jump through than a simple retention product.

LTV might also get effected with extra borrowing.


The key here is not what suits you but what suits the daughter.
Lowest rate possible is what would be best for her, increasing her LTV and payment would not.