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How exactly do I pay off a mortgage with a lump sum?

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Hi!
We're in the lucky position of being able to pay off our mortgage by the time our 5-year fix is finished next year. First thing I want to ask is that once the 5 years is over and we go onto the default rate, we then don't have to worry about any fees or penalties do we? Contract doesn't make it particularly clear to me.

Second thing I want to ask is what exactly is the usual process of paying off a mortgage with a large lump sum? Do I need a solicitor to act as a middle man? I'm very wary of sending that amount of money all in one go straight to the mortgage provider's account, so would prefer to send to solicitor first like we did with the mortgage initially - but is that the usual way of doing this?

And lastly, when do I start getting the ball rolling on this - do I need to give a certain amount of notice to the mortgage provider (it doesn't seem to say on the contract), and when can I start the process? Do I wait until we go onto the default rate so we're presumably free from all penalties then?

Thanks very much! :smile:

P.S. I will be ringing the mortgage provider to clarify things, but they were a pain to deal with last time so I'm putting that off until I have some idea about how this is normally done!

Comments

  • ManekiNeko
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    There isn't really a standard way that'll apply across all banks, but if you post your mortgage provider here, you might be lucky and find someone knows.

    Similarly, without looking at the terms of your mortgage, there's no real way to know if there are any payments or penalties. In the usual way of things, you'd have to pay an exit fee (a fee to settle the mortgage early). Mine is £80, for example. But you wouldn't usually pay anything else, as early repayment charges only apply during your fix. But that's just the way these things usually are, for your general understanding, I obviously can't know what your specific bank does.

    I have only recently gotten my first mortgage, so haven't yet been in your shoes, however, it's normal from everything I know to pay it directly to your bank. You could probably do it via a solicitor if you really wanted to, but you'd be paying them purely to type in your bank's sort code and account number and press "send."

    Personally, I like to set new payees up and send £1 first. After I'd see the £1 cleared off my mortgage balance, I'd then be happy enough to send however much it was. But you could also send it in smaller chunks if you really wanted to, I guess. You might find it harder to get a settlement figure from the bank though, as they'd keep applying interest each day. It would be easier to ring them, find out the settlement figure, and (having sent say £1 previously) then pay that.

    An alternative if you feel very worried would be to talk with your bank and see if they'd be willing to accept another payment method, such as a cheque or bankers draft, which you could physically go into branch and give to your bank that provides the mortgage (if your main bank is a different one to the one you took out your mortgage with). Bear in mind a bankers draft costs a little bit (£10?). Imo it's not necessary, but ymmv.
    Completed on first home: 30 June 2022
    Mortgage outstanding: £68,499 £64,841.60
    OPs made or saved (2022-23): £315.52
    OPs made or saved (2023-24): £690.24
    OPs made or saved (cumulative): £1,005.76 (1.47%)
    Interest saved to date: £ *to add*
    % of mortgage paid off: 5.34%
    MF date: June 2056 October 2055
    Daily interest costs: £3.10 £2.90 and a half pence (as of 12.02.2024)
    Emergency fund: £0
    Debt to DS: £10,000 £7,209.01. 27.91% repaid (DFD: Aug 2027 Nov 2030)
    Debt to DP: £1,423.55 (this will increase until DS repaid)
    Debt to non-profit: £4,500 £4,239. 5.8% repaid


  • RobM99
    RobM99 Posts: 2,535 Forumite
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    I just went to the branch and wrote a cheque.
    Now not a gainfully employed bassist.
  • crafterholic123
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    There isn't really a standard way that'll apply across all banks, but if you post your mortgage provider here, you might be lucky and find someone knows.

    Similarly, without looking at the terms of your mortgage, there's no real way to know if there are any payments or penalties. In the usual way of things, you'd have to pay an exit fee (a fee to settle the mortgage early). Mine is £80, for example. But you wouldn't usually pay anything else, as early repayment charges only apply during your fix. But that's just the way these things usually are, for your general understanding, I obviously can't know what your specific bank does.

    I have only recently gotten my first mortgage, so haven't yet been in your shoes, however, it's normal from everything I know to pay it directly to your bank. You could probably do it via a solicitor if you really wanted to, but you'd be paying them purely to type in your bank's sort code and account number and press "send."

    Personally, I like to set new payees up and send £1 first. After I'd see the £1 cleared off my mortgage balance, I'd then be happy enough to send however much it was. But you could also send it in smaller chunks if you really wanted to, I guess. You might find it harder to get a settlement figure from the bank though, as they'd keep applying interest each day. It would be easier to ring them, find out the settlement figure, and (having sent say £1 previously) then pay that.

    An alternative if you feel very worried would be to talk with your bank and see if they'd be willing to accept another payment method, such as a cheque or bankers draft, which you could physically go into branch and give to your bank that provides the mortgage (if your main bank is a different one to the one you took out your mortgage with). Bear in mind a bankers draft costs a little bit (£10?). Imo it's not necessary, but ymmv.

    Thanks very much for your reply :)
    My mortgage provider is Platform
    That's a good idea to send £1 then ask for the balance and pay it off in one chunk. Do you think it's best to wait until the fix ends to sort all of this out?
    Thank you!
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