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Mortgage Redemption

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Hi Folks - I'm a long time reader of the forum and because of that I thought I could benefit from your collective expertise.

I'm in the fortunate position to have taken out a fixed rate mortgage which has subsequently reverted to a BOE base rate tracker plus 0.75% so currently I'm paying an interest rate of 1.25%. Obviously this is a favorable state of affairs and I have savings in place so that if interest rates are hiked I can pay off the balance - effectively the status quo suits me fine. However this is obviously not much of a moneymaker for Santander who I have my loan with. On that basis I was considering approaching them with the offer of paying off my mortgage in full but at a discount to the actual amount outstanding. I'd be very interested in hearing from anyone who has undertaken this type of negotiation to see if i'm missing some obvious pitfalls and how exactly they went about it.

At the end of this calendar year the balance outstanding will be approx. 55k - what would be a fair offer for me to make?

Thanks for your help

P

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Hi Folks - I'm a long time reader of the forum and because of that I thought I could benefit from your collective expertise.

I'm in the fortunate position to have taken out a fixed rate mortgage which has subsequently reverted to a BOE base rate tracker plus 0.75% so currently I'm paying an interest rate of 1.25%. Obviously this is a favorable state of affairs and I have savings in place so that if interest rates are hiked I can pay off the balance - effectively the status quo suits me fine. However this is obviously not much of a moneymaker for Santander who I have my loan with. On that basis I was considering approaching them with the offer of paying off my mortgage in full but at a discount to the actual amount outstanding. I'd be very interested in hearing from anyone who has undertaken this type of negotiation to see if i'm missing some obvious pitfalls and how exactly they went about it.

At the end of this calendar year the balance outstanding will be approx. 55k - what would be a fair offer for me to make?

Thanks for your help

P

.

Edited by GinAndPlatonic

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These days a mortgage can be had at less than 2% for 2 years. Why would they pay you to get a mortgage off their books that's not much less than that? They still make a profit do they not however small?

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Assuming you have approximately 5 yrs left to run I would say a fair offer will be

£ 58,545.29

10 yrs a fair offer would be

£ 62,319.11

And so on.

You're a cash cow to the bank.

Naive if you think they're going to offer you a discount.

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What's your penalty for paying back the mortgage early? Sometimes there isn't any once the fixed part of your mortgage has expired. In that case you might be best paying it off then, and then your saving/discount will be all the interest you now wont have to pay.

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There seems to be some confusion around the facts based on the responses above. As it stands the fixed term of the mortgage has long since expired so I can pay off the outstanding balance at anytime without penalty.

Sine270 is correct in stating that the bank is making a small profit from my loan, however in terms of yield they're not pulling up any trees at 1.25% so it's not beyond the bounds of possibility that they would like to employ this capital in a more profitable proposition. As it stands the status quo suits me fine but it's not often you are in a deal with the banks where as the customer you have the advantage and if I can leverage that all the better.

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Like the other little coloured fish above I would really like to know the outcome from this query. Personally I think you would have a greater chance of success if you had missed payments and were likely to go into substantial arrears. Keep us updated please. :)

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