Overpayment before mortgage redemption

[TurboKirbo]

Hopefully this is a simple one but can someone with mortgage knowledge check my thinking please.

Does it make sense to make the max overpayment in my existing mortgage prior to early redemption?

We're moving & it's worked out financially better to redeem the old mortgage (90k) early & start afresh on a 5y fix.
We've included the early redemption fee of 3% (2700) on the new mortgage.

We have chosen to keep a pot of savings back for new carpets etc. but my thinking is it's more beneficial to pay off 9k of the old mortgage (max 10% overpayment) out of these savings before completion as this this will lower the early redemption fees by about £300 and we will 'get the money back' as the remainder from the new mortgage (because redemption figure on old mortgage would be £9,300 lower). While marginal, it should also positively impact any further monthly payments before we complete.

Mortgage remainder will then go straight back into savings (currently at a fractionally higher rate than our new mortgage of 3.99%) while we work out what we need to buy.

Am I missing anything or is this sensible? I am not in my comfort zone...

we will 'get the money back' as the remainder from the new mortgage (because redemption figure on old mortgage would be £9,300 lower

I don’t understand.

I would think that it would make no difference, as when you pay off your mortgage on moving , you will still get the 10% without early redemption fee.

However you will have lost the flexibility of what you do with that money if you pay it now - you might still need it for something unexpected.

An exception to this would be if you won't be moving until after when the 10% yearly repayment option resets. (January I think ours is but I'm not sure if that's the same for everyone)

What benefit are you gaining by paying the early redemption fee? A much better interest rate on the existing balance?

Yes.
Much better rate fixed 5 years.
Existing lender was poor rate and only for 3 with a sub account ending in 2.5y meaning either paying for another product or going over to variable. Plus tied to that lender while sub accounts running.
The difference in the higher monthly payments with existing lender totalled more than the redemption fee.

I'm happy that redeeming is the right decision.

Thanks for your reply @dootball - I'm not sure where the 10% comes into it.

I have to pay a 3% early repayment fee on the remaining total of my old mortgage. If I use this years 10% allowance, the redemption figure is lower and therefore the 3% fee is lower by about £300

As the existing mortgage is going to be closed, I will have a full 10% allowance in the brand new mortgage (unlikely we'll overpay for a little while yet anyway!)

I’m pretty sure the redemption fee is calculated on your initial lending figure ? Not what’s outstanding now? We’re in a similar position at moment and this is what I’m basing it on

Have you had a redemption statement done?

My redemption statement says the charge is 2700 on 90.

Worked as a mortgage advisor for many years and never came across this . It was always on the closing balance.

OP, it makes sense what you suggest although £300 isn’t a huge saving. Depends on whether you might need the 9k sooner .

Thanks @TheMumEdit - yes I appreciate it's a small saving but a better return than the money sitting in the bank for 3 months.

Reassuring to hear it IS closing balance!