Mortgage Switch - Question About Drawdown

T

tea4one

Registered User
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Hi Folks,
I am in the process of switching mortgages for the first time (from BOI to AIB). I have a question about the sum of money which is (yet) to be drawn down by my solicitor from AIB to pay off the mortgage with BOI.

Let's say in Jan 2017 I owe BOI 200k and my mortgage repayment to BOI is 1k per month.

- In Jan 2017, AIB send me a Letter of Loan Offer with a draw down figure of 200K to cover the re-mortgage. I then work with the solicitor over the next 2 months to switch the mortgage (it may only take 1 month but let's assume it takes 2 months).

- In March 2017, the balance on my mortgage with BOI is now 198.5K (since I paid off 1K in Jan and 1K in Feb and lets assume e500 was for interest: 1K + 1K - 0.5k = -1.5K off mortgage balance).

- In March 2017, my mortgage then transfers to AIB.

My questions are are as follows:

- Does the solicitor draw down 200K and pay BOI 198.5K and then give me the balance of 1.5K?
- Does the solicitor draw down 200K and use the 1.5K to cover part/all of their fees etc?
- Does the solicitor only draw down 198.5K (i.e. exactly what is needed on the "day of the switch"), leaving me to start with a mortgage balance of 198.5k with AIB?

Appreciate if anyone who has made the switch can help clarify.

Thanks,
tea4one.
 
Hi tea4one,

In my experience, our solicitor drew down (in your example above) 200K, used part of the 1.5K to cover their fees and then transferred any surplus to us via bank transfer..
 
Hi tea4one,

With us we were given the full amount and any surplus was up to us to decide what we wanted to do with it.
 
Hi Doorpep & Rebellad,

Thanks very much for sharing your experiences with regards to this question.

When I drop into the solicitors I'll query them on it. It sounds like it might be common practice to draw down the full amount, even if the outstanding balance at the time is less than this.

Thanks again for clarifying.
Tea4one.
 
Hi @tea4one

In my case the full amount was also drawn down initially, and the solicitor gave me the option of what to do. I advised them to return the funds to the new mortgage bank and they reduced the mortgage accordingly and adjusted the interest calculation accordingly. Anything else is actually lengthening your mortgage term.

To my knowledge, the solicitor is supposed to request an updated mortgage balance from the original mortgage holder and only draw down that amount, but based on the discussion above this does not appear to be common practice.
 
I would have thought they would have to draw down the actual amount in the loan offer as otherwise a new loan offer would need to be issued and signed for the different amount. Mind you that can be done and sent to solicitor for you to sign again before release of funds but may cause delay. Easiest thing if you want to start with exact same ending balance is send back the difference as a lump sum lodgement.
 
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