What happens at remortgaging?

Deedoodee

I’ve recently bought my first house and my plan had been to regularly overpay by a few hundred, and also throw in anything that is ‘extra money’ eg work bonus/ birthday money etc. but my savings interest is higher than my mortgage (1.81 vs 1.63) so I’ve been saving them in my savings account. 

My mortgage rate is fixed til April 2024. I understand you can start looking for new deals approx six months before it expires. 

So say at the end of 2023, my mortgage owed is £100,000 and I have £5,000 in savings that’s been labeled as ‘overpayments’. Do I apply for a remortgage deal for £95,000, and give the extra £5k to the old lender in April 2024?

[Deleted User]

I'm no expert, but I'd assume you would be better contributing your £5k savings to your existing mortgage as overpayments, prior to remortgaging so as to reduce your LTV and therefore, possibly landing a better interest rate with your new provider. Unless there are specific benefits to waiting (other than accruing interest in savings), that I'm not aware of. Hopefully someone can confirm whether this is accurate.

Deedoodee

Deleted_User said:

I'm no expert, but I'd assume you would be better contributing your £5k savings to your existing mortgage as overpayments, prior to remortgaging so as to reduce your LTV and therefore, possibly landing a better interest rate with your new provider. Unless there are specific benefits to waiting (other than accruing interest in savings), that I'm not aware of. Hopefully someone can confirm whether this is accurate.

Thanks. My LTV is already in the 40% bracket so don’t think going any lower will help with the interest rates. Are there any other benefits to putting in the lump sum now instead of waiting?