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    • rosieraspberry
    • By rosieraspberry 12th Aug 18, 5:45 AM
    • 46Posts
    • 17Thanks
    rosieraspberry
    Paying capital off old mortgage or keeping it for new mortgage?
    • #1
    • 12th Aug 18, 5:45 AM
    Paying capital off old mortgage or keeping it for new mortgage? 12th Aug 18 at 5:45 AM
    My mortgage's fixed rate ends in two months.
    I am trying to sell my house at the minute to buy a bigger one but suspect it might take a while.
    I have 50k of savings which will go towards my new propety.
    Is there a way I can pay off some of the oustanding mortgage on my current property without getting tied into a new mortgage for a certain amount of time or would this attract a product fee?
    Is it a bad idea to pay off the capital anyway and have it tied up in the house I want rid of? I owe 90k on my mortgage at the minute and would still have to pay that even if house prices dropped through the floor!
    When you are in your forever home what is the cheapest way of paying off your mortgage early (ie. if possible avoiding product fees and early repayment charges)?
    Can you switch your mortgage to another bank (after any fixed term) and pay an extra few thousand off while doing so or is that not how it works?
    Thanks for any responses on this.
Page 1
    • getmore4less
    • By getmore4less 12th Aug 18, 6:54 AM
    • 33,592 Posts
    • 20,320 Thanks
    getmore4less
    • #2
    • 12th Aug 18, 6:54 AM
    • #2
    • 12th Aug 18, 6:54 AM
    you have a lot going on there.

    Breaking it down.

    selling and moving with a fix rate ending soon.

    That gives 2 main options go to the follow on rate or take a new product(current or new lender) with either no ERC or a view to porting to a new property.

    I have 50k of savings which will go towards my new propety

    again 2 main options pay down the current mortgage or keep the cash and reduce the new borrowing at the time.


    When you are in your forever home what is the cheapest way of paying off your mortgage early

    bigger payments on the lowest rates you can find, how to optimise that depends on the real numbers at the time as there is no one size fits all answer

    -----------------------------
    Anyway the short term is getting the forever house.

    One strategy is move onto the follow on rate overpay the max you can to reduce the debt on the existing place till it is sold.

    Then just get a new mortgage with the current or new lender.

    With net borrowings of 40k the interest cost to retain the flexibility is going to be under 100pm for a rate increase of up to 3%.


    If the rate you have(or can get) on your current debt is very good that could be worth keeping and porting to a new place using the cash and/or top up borrowing that means trying to pick the best lender that will do a port and decent top up if needed.

    How much you need to borrow going forward will influence the choices will the 50k be enough to move or will you need to borrow more?

    The more complicated the series of transactions picking the right lender becomes more important so that's where the help of a broker will be really useful.
    • rosieraspberry
    • By rosieraspberry 12th Aug 18, 7:20 AM
    • 46 Posts
    • 17 Thanks
    rosieraspberry
    • #3
    • 12th Aug 18, 7:20 AM
    • #3
    • 12th Aug 18, 7:20 AM
    Thanks a lot for your response.
    I think it will probably be worth keeping the cash and overpaying until we move. I imagine finding a mortgage and porting it across to the new house would be quite complicated; finding a deal that works best for both properties.
    We will probably need to borrow 200k-210k to buy the new house.
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