Have I got this right? Mortgage advice please!

[AlrightyThen1234]

So my 2 year fixed rate is coming to an end soon and my mortgage broker will be redealing for me (he's unavailable at the minute so can't ask him). I presume it will be a whole new mortgage application... I think I'm staying with the same bank. I was going to throw a little chunk of my savings / overpayment at the mortgage before redealing so I need to borrow less and I've shaved off some interest... hopefully it'll give me a better deal... am I missing anything on this it seems sensible to me?

You should be able to login and see what deals are available, not do a completely new application.

You broker should compare what is available as a rate switch and what is available as an external new application.

They will then advise what is best for you.

Rate switches are just a form signed and job done.

New application exteranlly is fully underwritten.

It depends on how much of your savings you’re throwing that way and how safe your job is

Personally, I’d be keeping my savings for myself just in case anything happens job wise and would instead make sure there’s a term that I can overpay without paying penalties

It is worth discussing this with your broker because it might make no difference to your interest rate to add the extra cash. Ie on a £500k mortgage if you’re adding an extra £10k it won’t make much difference and might make sense to keep hold of the cash for now.

@ShirleyPhallus - Great point.

Interest rates are so low at the minute, the interest you save is not that significant. Ironically last year you would have been better investing that overpayment and benefitting on the returns.

How about keeping the money and making monthly ovepayment, but if circumstances change, you have a lump sum to work with.

Food for thoughts.

Thanks all... I'll be holding back 90% of my savings my job is secure at the minute but I don't think anyone's job is "very" secure right now. I thought it was a brand new application... I only bought my first house a couple of years ago so it's new to me, good to know it's not that difficult x

There are thresholds and if you earn x% of the value of your home you will get better rates. Say you started with a 90% mortgage, a bit of a rise in values and a bit of cash might get you down to needing an 80% mortgage which could get you better rates. Worth mentioning to advisor if it’s possible.

Might be worth looking into offset mortgages - where the cash in your bank accounts offsets the loan and means you pay less interest that way.

Probably most significant is whether putting some savings towards the mortgage qualifies you for a lower LTV product, which will have a lower interest rate.

In my experience the interest rate on offset products has always been higher than non offset, so not worth having. I've always self offset by saving the money separately. Even now I can (just about) beat the mortgage interest rate with savings, but that's because I have a very low interest mortgage.

While it's important to have an emergency fund, be aware that having significant savings reduces your entitlement to benefits. If you overpay your mortgage, you benefit from a lower mortgage balance, and would be entitled to benefits if you needed them.

If you keep the money savings, you wouldn't get benefits and would be exp

Sorry, fat fingers, you would be expected to live on the savings you could have used to overpay your mortgage.

There was a poster on here a few months back who came unstuck due to that rule.

I'm not sure why you would think you are staying with the same bank? You/ your broker should look across the whole market to check for the best deal.

Even if it's a new application, they're not that tricky.

As pp have said, if you have some flex to add some savings, if it takes you across a LTV threshold, that might open up more cheaper options for you.

I was going to suggest you have a play on a website like uswitch because it will show you what happens to totals costs and monthly rates if you tweak your inputs, but if you're going to be paying a broker, you may as well get him to earn his money!

@MaggieFS - Sadly, at the minute it is very tricky.

Lenders are more vigilant than they have ever been, service levels are appauling and the panel conveyancers being uses are shocking.

If there is minimal difference between a rate swap and whole of market new app, for your sanity it may be worth considering the rate swap.

@fromdownwest Yes, fair points if there's not much in it. Personally, I would try and avoid a panel solicitor anyway, but appreciate there are often financial incentives.

Always advsie going from cash back to put towards a high street conveyancer.

Properties are literllay lost by using panel solicitors.

I know of estate agents, who will put offers to the bottom of the pile if they are using one. To be fair, I can see why.