Timing of using savings to bring down mortgage before remortgaging

We3

We fixed for 5 years in 2020 at 1.3%. Since then we've been saving because our savings rates have exceeded the mortgage rate. We now have a sum of money we'd like to use when we remortgage to bring down the amount. My question is about the timing of doing this: would we need to go on to the SVR first, use the lump sum, then remortgage? Or could we essentially do it as part of the remortgaging process?

Hoenir

Is the amount that you hope to overpay by within your lender annual overpayment allowance? 

We3

Hoenir said:

Is the amount that you hope to overpay by within your lender annual overpayment allowance? 

No it's more. 

Hoenir

Then overpaying once the fixed term expires is your better option. Drop onto the SVR then refix. 

Though nothing to stop you overpaying shortly before expiry up to the limit. 

user1977

You should be able to do it as part of the remortgage.

We3

user1977 said:

You should be able to do it as part of the remortgage.

This is what I was hoping because going onto the SVR for potentially a month is going to be expensive. 

moneysaver1978

Why not pay to the max overpayment allowance now and when the fixed term ends, add the rest as part of the mortgage?

We3

moneysaver1978 said:

Why not pay to the max overpayment allowance now and when the fixed term ends, add the rest as part of the mortgage?

Simply because the money is currently getting much higher interest (over 5%) than our mortgage which is 1.3%. 

saajan_12

You can time it to do it as part of the remortgage, which can be on the day or anytime after the fixed term expires. So if the timelines slip by a few days / weeks, you're just on the SVR for that shorter time, it doesn't have to be a full month. 

Basically you apply for a new mortgage in the amount of [balance] - [savings]. Then once the fixed term expires, you use the savings + new mortgage to clear the old mortgage, via a solicitor.

jrawle

It may be worth checking the terms of your mortgage. Some lenders allow you to overpay more in the final month of your fixed period. Also, some lenders waive ERCs if you are switching to a new deal with them. Is it going to be a true remortgage, or just a switch to a different fixed deal with your existing lender? Perhaps you don't know yet, but the latter is likely to make things easier.

kingstreet

Are you remortgaging, or looking for a rate switch/product transfer with your existing lender? Everyone is talking about remortgaging without checking your understanding or intentions. How you proceed will be determined by the route you plan to take.