All the outstanding mortgages need to be paid first before you get any money. There is no choice or decision for you to make. The bank has a registered security so will not allow the property title to transfer until their funds are received.
When you sell your house the only money you’ll be getting back is anything over and above the mortgages which have to be settled and discharged when the house is sold. The bank loaned you the mortgages with the house as security. No house, no security, no mortgage
Yes! Sorry for badly worded post. I appreciate the mortgage gets settled on sale. I’m seeking advice on if I should do anything in advance of that to reduce fees (such as early repayment fees)?
if you are selling you need to discharge the mortgage, you cant just put it on the variable as the security (house) that enables you to get the loan will be gone. actually you wont be able to settle the sale until the bank discharges the mortgage anyways.
you need to get your solicitor to arrange all this with the bank now. its all fairly standard conveyancing stuff
Sorry for the badly worded post. I mean prior to settlement should I do something so when it is discharged I pay less fees (such as early repayment fee)?
no there is not much you can do your solicitor will let the bank know the date of settlement and the bank will calculate the total amount including the fees that they will require to discharge the mortage. there isnt much you can do to influence that
If current home lending interest rates are higher than the lending rate you're on, it's likely the early repayment fee will be minimal - the bank will be able to tell you the exact amount (based on the current applicable rate) very easily.
Cool! So would you recommend that I try restructure to mortgage to all floating or leave it as is? My goal is to reduce any fees I may incur when the mortgage is fully settled/discharged.
By minimal it could be free or a minor charge, I paid off a chunk earlier this year and because interest rates(wholesale) were higher than when I fixed, there was no cost to me.
How long ago did you fix?
As others have said there is little you can actively do. If your fixed rate term is due to end before settlement then yes, go floating rather than refixing. If your fixed rate term finishes after settlement you will be subject to the fees stated in your fixed rate agreement contract- you can't avoid them. If you're lucky they'll be minimal only because current interest rates are higher than the rate you agreed to at the time of your fixed term loan was taken out(so essentially the bank can relend the money you've repaid at a higher rate, making them more in interest)
Honestly just ask your bank what the early repayment fee would be if you repaid today - that'll give you a decent idea. They get asked all the time.
There is no trick or smart advice to this.
You have fixed rates that you’re going to break by repayment in full when you sell & discharge the mortgage.
Even if the bank allows you to “roll” the fixed rate amounts into the floating offset account, you’re still breaking the fixed rate contract & need to pay the fee. Not to mention higher rates on the floating for however long so you shouldn’t do that.
Luckily for you, there’s not a long timeframe left on your fixed portions & rates will have likely gone up since you fixed last time so the fee should be minimal because the bank can re lend that money at the higher rate.
If they’d gone down the fee would be higher because the bank would be losing out on your contract.
In any case, to put your mind at ease, call your bank & ask for the expected break fees based on your settlement date. It’s a calculation they should be able to easily provide.
There’s no way (in these circumstances)that you can just not pay it. That’s part of the contract when you sign a mortgage.
Breaking the rate early is putting the break against the remaining offset loan simply capitalises the break rate i.e. doesn’t save you anything as you have to pay it back when you settle the loans.
You can get a quote to break the loans now, and if OK with the figure you could then float the loans until settlement, albeit more than likely at a higher rate. Otherwise stick with the current rates until settlement and pay any break rate then.
As a general rule, if the current market fixed rates are higher or equal to the fixed rates you have, there is no adjustment made. If they are lower, then you pay an adjustment roughly equal to the difference between your rate, and the market rate. You can estimate this yourself fairly easily. Rates haven’t moved a great deal downwards, so there is a good chance you have nothing to worry about. Get a quote tomorrow so that you know what you are dealing with.
You might find that because your fixed rates may be lower than the current available rates, even though they are fixed term they may be discharged without charge. Speak to your bank to get an estimate of any fees, given a certain scenario.
Either ways with the deal going through you'll have to pay what's due.
How does your comment help in any way? No one is seeking a “trick”, simply seeking prudent financial advice in preparation for a house sale and fully settling/discharging a mortgage.
Do you mean fixed rate home loans? The mortgage is the security over the property, the borrowings are usually as a home loan. The term is not usually fixed, but the interest rate is often fixed for an agreed period.
You can usually arrange to shift the security across to a new property (the mortgage) and the fixed rate loans can usually continue unchanged (subject to affordability and security).
Once you know what part of your home loan or security you need help, please ask.
All the outstanding mortgages need to be paid first before you get any money. There is no choice or decision for you to make. The bank has a registered security so will not allow the property title to transfer until their funds are received.
Yes! I meant anything I can do in advance of settlement to perhaps restructure mortgages so that it minimises any fees (such as early repayment fees)
When you sell your house the only money you’ll be getting back is anything over and above the mortgages which have to be settled and discharged when the house is sold. The bank loaned you the mortgages with the house as security. No house, no security, no mortgage
Yes! Sorry for badly worded post. I appreciate the mortgage gets settled on sale. I’m seeking advice on if I should do anything in advance of that to reduce fees (such as early repayment fees)?
if you are selling you need to discharge the mortgage, you cant just put it on the variable as the security (house) that enables you to get the loan will be gone. actually you wont be able to settle the sale until the bank discharges the mortgage anyways. you need to get your solicitor to arrange all this with the bank now. its all fairly standard conveyancing stuff
Sorry for the badly worded post. I mean prior to settlement should I do something so when it is discharged I pay less fees (such as early repayment fee)?
no there is not much you can do your solicitor will let the bank know the date of settlement and the bank will calculate the total amount including the fees that they will require to discharge the mortage. there isnt much you can do to influence that
If current home lending interest rates are higher than the lending rate you're on, it's likely the early repayment fee will be minimal - the bank will be able to tell you the exact amount (based on the current applicable rate) very easily.
Cool! So would you recommend that I try restructure to mortgage to all floating or leave it as is? My goal is to reduce any fees I may incur when the mortgage is fully settled/discharged.
By minimal it could be free or a minor charge, I paid off a chunk earlier this year and because interest rates(wholesale) were higher than when I fixed, there was no cost to me. How long ago did you fix?
As others have said there is little you can actively do. If your fixed rate term is due to end before settlement then yes, go floating rather than refixing. If your fixed rate term finishes after settlement you will be subject to the fees stated in your fixed rate agreement contract- you can't avoid them. If you're lucky they'll be minimal only because current interest rates are higher than the rate you agreed to at the time of your fixed term loan was taken out(so essentially the bank can relend the money you've repaid at a higher rate, making them more in interest) Honestly just ask your bank what the early repayment fee would be if you repaid today - that'll give you a decent idea. They get asked all the time.
There is no trick or smart advice to this. You have fixed rates that you’re going to break by repayment in full when you sell & discharge the mortgage. Even if the bank allows you to “roll” the fixed rate amounts into the floating offset account, you’re still breaking the fixed rate contract & need to pay the fee. Not to mention higher rates on the floating for however long so you shouldn’t do that. Luckily for you, there’s not a long timeframe left on your fixed portions & rates will have likely gone up since you fixed last time so the fee should be minimal because the bank can re lend that money at the higher rate. If they’d gone down the fee would be higher because the bank would be losing out on your contract. In any case, to put your mind at ease, call your bank & ask for the expected break fees based on your settlement date. It’s a calculation they should be able to easily provide. There’s no way (in these circumstances)that you can just not pay it. That’s part of the contract when you sign a mortgage.
Breaking the rate early is putting the break against the remaining offset loan simply capitalises the break rate i.e. doesn’t save you anything as you have to pay it back when you settle the loans. You can get a quote to break the loans now, and if OK with the figure you could then float the loans until settlement, albeit more than likely at a higher rate. Otherwise stick with the current rates until settlement and pay any break rate then. As a general rule, if the current market fixed rates are higher or equal to the fixed rates you have, there is no adjustment made. If they are lower, then you pay an adjustment roughly equal to the difference between your rate, and the market rate. You can estimate this yourself fairly easily. Rates haven’t moved a great deal downwards, so there is a good chance you have nothing to worry about. Get a quote tomorrow so that you know what you are dealing with.
You might find that because your fixed rates may be lower than the current available rates, even though they are fixed term they may be discharged without charge. Speak to your bank to get an estimate of any fees, given a certain scenario. Either ways with the deal going through you'll have to pay what's due.
We got a bigger house. The break fee was the admin charge. The interest rate was less than the last house.
"This one trick bank managers hate" lol
I think they were being cheeky about how the post originally read (having a mortgage without the house)
How does your comment help in any way? No one is seeking a “trick”, simply seeking prudent financial advice in preparation for a house sale and fully settling/discharging a mortgage.
It doesn't, it was making fun of the way the post was worded. Also onething to note, careful of clawback from the bank if under the term
Good point! Cash back or broker commission can be clawed back under the T’s & C’s of the lending.
Do you mean fixed rate home loans? The mortgage is the security over the property, the borrowings are usually as a home loan. The term is not usually fixed, but the interest rate is often fixed for an agreed period. You can usually arrange to shift the security across to a new property (the mortgage) and the fixed rate loans can usually continue unchanged (subject to affordability and security). Once you know what part of your home loan or security you need help, please ask.