Redemption Fee

firsttimebuyerlpl

I’m currently in the process of purchasing a new property and will be using £50k equity from my current property to pay the deposit on the new property. 

I received the redemption figures from the solicitors for our current mortgage provider - we’ll be changing mortgage provider for the new property. The redemption fee is approx £70k. She solicitor has said that on occasion, banks ask for the redemption fee to be paid in full and then refund and they won’t use to money paid by the new buyers of our home to offset the cost. Thus meaning I may have to pay the £70k redemption fee plus £50k deposit and eventually be refunded the £70k redemption from Santander. 

Has anyone experienced this? I assumed they would use the money from the new buyer of my property to offset the redemption and I would pay any balance to the solicitor for fees etc  

housebuyer143

firsttimebuyerlpl said:

I’m currently in the process of purchasing a new property and will be using £50k equity from my current property to pay the deposit on the new property. 

I received the redemption figures from the solicitors for our current mortgage provider - we’ll be changing mortgage provider for the new property. The redemption fee is approx £70k. She solicitor has said that on occasion, banks ask for the redemption fee to be paid in full and then refund and they won’t use to money paid by the new buyers of our home to offset the cost. Thus meaning I may have to pay the £70k redemption fee plus £50k deposit and eventually be refunded the £70k redemption from Santander. 

Has anyone experienced this? I assumed they would use the money from the new buyer of my property to offset the redemption and I would pay any balance to the solicitor for fees etc  

No, that's doesn't happen. You ensure they all complete on the same day and then the money from your sale funds the deposit. 
Not many people have all the equity from their home in their bank ready to do this, so it isn't required. 

The solicitor collects the money from your sale and uses it to pay off your old mortgage with the extra left over and the mortgage money used to pay for your purchase.
Santander should never be sent £70k too much because the solicitor holds all the money and it wouldn't make any sense to send it to them just to get it back.

user1977

Bit confusing as you talk about a redemption "fee" - but presumably the £70k is just the balance of your mortgage account, not a fee?

kingstreet

user1977 said:

Bit confusing as you talk about a redemption "fee" - but presumably the £70k is just the balance of your mortgage account, not a fee?

I'd read as redemption figure not redemption fee too.

firsttimebuyerlpl

Yes, for clarity, it’s a redemption “figure”