Redemption figure more than expected on switching mortgage

Nath17

Hello 

Long time reader, first time poster. Please bear with me because I am not really familiar with finances! Just posting this to get some ideas rather than stewing all bank holiday weekend waiting to speak to banks on Tuesday. 

I am moving mortgage from bank 1 to bank 2, as my current deal with bank 1 is ending and they couldn’t match the rate bank 2 are offering. 

I got a letter from bank 1 informing me of the end date of my current deal, with an outstanding balance of (eg) £100k. 

In my application to bank 2, I put £100k down as my required borrowing amount and all was dandy. House valued well above the minimum value required to get my new rate. 

Conveyancers have requested redemption figure (final settlement value) from bank 1 and it is now (with added fees and other usual gubbins and probably a misunderstanding on my part) £101.5k. 

I absolutely cannot afford to magic £1.5k out of nowhere. Can I ask Bank 2 to increase the mortgage amount to £101.5k so the shortfall is lower? I appreciate I will have to pay usual scalping fees to solicitors, but I’m just wanting an idea as to whether I’ve bollocksed it and need to find £1.5k out of nowhere or if it’s a (relatively) simple task of asking bank 2 to up the mortgage a little more?

Me and my partner have excellent credit scores and the house is valued well within the limit for the better deal (LTV) etc etc. 

Any thoughts?! It was a *lovely* email to receive on a Friday evening before the long weekend informing me I need to cough up another £1.5k!!

Thanks. 

ACG

You can do, but why not delay completion? 
The £1.5k early repayment charge is only applicable if you repay early. Delay completion until your fixed rate ends. 

Nath17

I wasn’t even aware there was an early completion charge, LOL. In my defence, the redemption statement from bank 1 didn’t really breakdown their value. 

Can I simply ask my solicitors to delay until the end date of my current mortgage deal and that should reduce the amount? There’s no “asking solicitors to move completion date” charge?

MovingForwards

Yes you can ask the solicitors to delay completion, provided your offer is valid for however long until no ERCs; it's still completion whether buying a different home, remortgaging or selling.

The ERC would have been detailed in your original offer correspondence, you may want to carefully read everything for the new mortgage too so you don't come unstuck if you remortgage again in the future.

Double check your original paperwork for details of the redemption fee, generally under £200 as that's the cost for your outgoing lender to release their mortgage from the property.

ACG

Have a look at your mortgage offer from Bank 1. 
It will normally say your rate is fixed at x.xx% until 31/xx/20xx. 
If you delay completion until the 1st of the following month, it would usually mean you have no early repayment charge, you will still need to pay a "deeds release fee" which is anything from £80-250 (depending on the lender). 

Your solicitors wont charge you for changing the completion date. You might have to pay for a new redemption figure, some lenders charge for a second redemption figure, but I think that is only about £10. 

On a side note if I have just saved you £1.5k, I am happy to send over my bank details to go halves (only joking). 

Nath17

Got you, so I’ve re-read the redemption statement from bank 1 and the ERC is detailed on there (I know, I should read things more carefully!!)

The deal with bank 2 is valid until October, we’ll beyond the date my deal with bank 1 ends on 30/06/2022. 

I have emailed my case handler back and asked to:

Ask for another redemption value for what I would owe on 01/07/2022 (when my current fixed rate ends)

push the completion date to this date so as to avoid ERC. 

I have checked literature and it’s £25 for another redemption statement. I’d happily pay this than the £1438 ERC!!

Thanks for the advice.