Could you "sell" your favourable mortgage rate back to your lender?

Hi All,

I am in the lucky position of being on a favourable rate on my mortgage for another 3 years or so. However it got me thinking...

This is not a good situation for the lending bank, they're lending at a rate much lower than they could in the current market.

So could I offer to switch to a mortgage at the current rate, and get paid the difference by the lender for doing so? (the differences between the cashflows would have to be calculated and discounted)

So I'm assuming the answer to this is no because I can find no information about it online, but I thought it might be an interesting discussion and if the answer is no, why would lenders not offer this? (assuming they could build in a profit margin)

Comments

  • ACG
    ACG Posts: 23,606
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    No. 
    The banks get the money in at x. They then sell it at y. 
    To buy the money back from you, they would then need to try and sell it again, that exact amount otherwise they are then trying to sell 2 different products. Can you imagine the admin involved? 
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • born_again
    born_again Posts: 13,531
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    Mortgages are a long term lending. Don't worry they are not losing out. It's all costed out & the bank will be very happy with the profit at the end of the full mortgage term.

    Look at it from the other way when BOE cut rates in 2020, many were in the reverse situation to you now.

    So take your low rate & enjoy it while you can. In fact overpay while you can now & reap the rewards in saved interest over the long term.

    All swings & roundabouts.

    But at the end only one party comes out in front & it's not the customer 👍
    Life in the slow lane
  • Countist
    Countist Posts: 41
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    Thanks for the responses!

    ACG: I have to be honest I don't follow, it's not really any different from someone wanting to remortgage but with an extra payment involved? What am I missing?

    Born_Again: But in the reverse situation, you could actually do something? You could remortgage onto the lower rate and pay the early repayment charge (or am I wrong?)

    Also, would I not be better off putting any saved money in a high interest bank account rather than paying off the mortgage?


  • Edi81
    Edi81 Posts: 1,422
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    The bank has already fixed the borrowing for your loan so no advantage for them. Plus, the admin of this would be a nightmare. Never going to happen. 
    In fact, mortgages written years ago will have a larger profit than ones today. 
  • ACG
    ACG Posts: 23,606
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    It is different to a remortgage. 

    The bank might be paying a saver say 2% interest until the 31st of June 2024. You are paying 2.5% until the 31st of June 2024. 

    What you are saying is you want to sell your mortgage back to them at say 5% or lets just say 2.5%, they still have to pay their saver 2%. They then have all of the hassle of sort it all out. On a £200k mortgage, they are making around £1,000 profit a year. 

    From that they have to cover the admin of dealing with the original application, redeeming it and now you want to include them buying the mortgage back from you...

    I dont know the exact figures btw. I am making some assumptions but hopefully you get the idea. 
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • sammyjammy
    sammyjammy Posts: 7,288
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    you should read up on swap rates!
    "You've been reading SOS when it's just your clock reading 5:05 "
  • Countist
    Countist Posts: 41
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    Isn't a swap exactly what I'm proposing? Just that one side pays money to enter the swap and the other receives it? (and both legs are fixed rate)
  • ACG
    ACG Posts: 23,606
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    Countist said:
    Isn't a swap exactly what I'm proposing? Just that one side pays money to enter the swap and the other receives it? (and both legs are fixed rate)
    To an extent. 
    But your talking about what? £100-300k? Lets say £500k. 

    Banks do it for millions, if you look at £10m, based on an average mortgage of maybe £250k, thats only 40 mortgages. They are probably buying in £250 million (again, I have no idea on the exact figures), but surely you can understand they are not interested in negotiating for a one off mortgage. 
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
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