Remortgage can I back out?

grayson

I've recently applied to remortgage with another lender as my current fixed rate finishes Feb 28th.
I applied for tracker with Nationwide. The product if fee free. I applied last Friday and surveyor came round today. I have just received the mortgage terms and the first payment of mortgage is nearly doubled what I was quoted when I applied l  First payment £459 followed by 23 monthly payment of £271. Also it states for every £1 I borrow I pay them £1.48. I'm thinking of just paying the mortgage off now Although it will leave me with no savings. My questions;  Can I cancel the application, if so will I have to pay any fees? I've not signed anything yet. Also is it a good idea to pay mortgage off £32000? Even though it will leave me with no savings.

Thanks

chanz4

first payment is always higher

JMA74

whoever set this mortgage up for you has not explained things very well. 

The £1.48 for every £1 assumes you stay with Nationwide for the initial product period and rates dont change.  It then assumes you dont remortgage at all and you sit on their variable rate which is currently 6.99%.  

You wouldnt sit on 6.99%, you would move to a new deal when your current one expires.  As soon as you do that then the £1.48 number changes.   

I always tell clients to ignore it as it causes too much confusion for zero benefit


The first payment being higher is based on when you complete and when your payment is due.  If at the moment you usually pay your mortgage on the 1st of the month each month then its nice and easy. However when you remortgage you might complete on the 10th of a month for instance. This means that your first payment will be for the whole of next month and for the 20 days of the month you completed in.  However you only pay interest for those 20 days so its not quite as much as it could be.   
Depending when you complete in the month it might be close to a normal payment, the payment quoted on the illustration is always for a worst case scenario. 

Bear in mind that if you pay your current lender on 1st of March and complete on your new mortgage on the 2nd, its likely you will end up having most of your 1st March payment refunded to you. So the larger payment to nationwide is offset by this.  The exact details of how this works differs depending on the lender you are leaving. Some will refund the difference, some will keep it but you will end up with a surplus from the remortgage given to you. 


I know this is quite wordy and might still not make sense so please ask for any clarification if needed but dont cancel your remortgage over this, its just a misunderstanding really. 

london21

The first payment is always higher.

There are minimum amounts banks lend for mortgages.

Another option is to maybe pay half and get mortgage for half that way you will still have some savings. 

Sncjw

Is there any erc if you pay the mortgage in full. If I had the savings I would pay off the mortgage as you will be saving on interest and you can easily build your savings up again and you will have more money free the money you have for the mortgage payments plus what ever you were saving too

Edi81

What is the current lender offering? For a mortgage as small as yours it’s never worth paying any fees. 

grayson

The mortgage is a fee free tracker. Unlimited overpayment with no penalty. I think I will pay half off when it goes through. This will leave me with some savings. The reason I've not paid off my mortgage is I need new windows and doors. Also my wife relies on her car for work and it's been playing up lately. I can see us needing a new car within the not to distant future. 
Thank all

grayson

If I paid half of it off when complete will the tracker interest rate stay the same? As when I applied for 25,000 the interest rate was slightly higher.