transfering mortgage to new house

jennfercain

Hi

We bought our first house for £137,000 in June 2007 with a mortgage of £130,000.
We're thinking of moving in March and I'm obviously worried that our property will have dropped in value.
If it sold for 130,000 (what we borrowed) would that mean that I would have to start a fresh with a deposit for a new house?

Also we got mortgage with a 5% deposit, if I stay with my current lender will they stick to the 5% or is there a chance they'll want more?

Thanks for your help!

Cleaver

jennfercain wrote: »

Hi

We bought our first house for £137,000 in June 2007 with a mortgage of £130,000.
We're thinking of moving in March and I'm obviously worried that our property will have dropped in value.
If it sold for 130,000 (what we borrowed) would that mean that I would have to start a fresh with a deposit for a new house?

Also we got mortgage with a 5% deposit, if I stay with my current lender will they stick to the 5% or is there a chance they'll want more?

Thanks for your help!

It's obviously hard to judge the value of your house without knowing the location, etc. but if it is an 'average' property then it's probably lost at least 10% of the original value since June 07 and, if the majority of commentators are right, could lose another 10% by March next year. So the value could be around £110,000 by then.

Buying a house when prices were very high with a view to moving less than a year later would probably not be a great move. I would suggest staying in your house, overpaying the mortgage as much as you can and not moving for a good few years.

Obviously the above is just my opinion, others may advise differently.

With regard to the mortgage, if you did sell for £130k you would effectively lose your deposit. Your currentl lender won't ask for more money if you stay in your house, but I imagine they would if you moved, and would want at least a 10%+ 'deposit'. However, if I'm wrong on that a mortgage advisor person will probably be along shortly to correct me.

What are your reasons for moving on so quickly if you don't mind me asking?

silvercar

If you took a repayment mortgage you should find the outstanding balance would be less than the initial amount. You also need to check that there are no penalties for repaying your mortgage early, for example if you are on a fixed deal.

That said, you need to raise enough money to repay your outstanding mortgage. So if it is £130k, you would need to get that from the sale and if necessary add savings to it (or borrow elsewhere) to repay the loan. Remember to allow for solicitor fees and estate agent costs.

For your new home, I think the highest LTV available at the moment is 90%, so you would need to find 10% of the new purchase price.

jennfercain

My partner has been working away for the last year and we need to live together!
I live in Manchester close to the M60, I don't think our property would have dropped by 20% by March. It was quite a good price when we got it and we've done a lot to the garden and throughout the house.

Thanks for your reply!

jennfercain

I was under the impression that if all I'm doing is transferring my existing mortgage to a new property I wouldn't have to stump up more deposit. I've just asked my partner and he said he rang the lender a few weeks ago and they said we could stick to the 5% deposit as were existing borrowers, does this sound right?

Cleaver

jennfercain wrote: »

My partner has been working away for the last year and we need to live together!

That's a pretty good reason!

jennfercain wrote: »

I live in Manchester close to the M60, I don't think our property would have dropped by 20% by March. It was quite a good price when we got it and we've done a lot to the garden and throughout the house.

Thanks for your reply!

I don't want to blunt, but I wouldn't rest your hopes that the price you got it for or your DIY will protect it from the falls. If you bought a wreck that needed a lot of doing up, then you're possibly somewhat sheltered. But I imagine if it was a newish propety, or one in pretty good nick, it'll probably drop just as everyone elses has.

I have an unusual terrace bought in early 2004 with a massive extension, mezzanine deck, skylights etc. that I'm in love with and (think) I got a good deal on and thought to myself for a while "hmm, I'll be okay in a crash as my house is very unusual and really, really, ace". But I've stopped deluding myself and accepted the truth.

I'm not saying you're deluded by the way! Only you (and possibly a surveyor) knows the price of your abode. :cool:

Cleaver

jennfercain wrote: »

I was under the impression that if all I'm doing is transferring my existing mortgage to a new property I wouldn't have to stump up more deposit. I've just asked my partner and he said he rang the lender a few weeks ago and they said we could stick to the 5% deposit as were existing borrowers, does this sound right?

If you borrowed £130k on a pretty standard mortgage in June 2007 (about 5 or 6%?) you will have paid off about 5k of the capital by March 2009. So if you really can sell your home for £130k you will have 5k left over for your next purchase (provding you have additional funds to sell your current house and buy the next one, as your fees will probably be close to 5k to do that).

So if you did sell your property for 130k then yes, theoretically you could buy the next place for 130k and keep the same mortgage provider. However, I have a feeling your lender would want more equity in the house now as we are in very different times to June 2007.

silvercar

jennfercain wrote: »

I was under the impression that if all I'm doing is transferring my existing mortgage to a new property I wouldn't have to stump up more deposit. I've just asked my partner and he said he rang the lender a few weeks ago and they said we could stick to the 5% deposit as were existing borrowers, does this sound right?

A few weeks is a long time in the banking world. It may be that they value your custom, but I would expect them to require a 10% deposit at the moment.

jennfercain

Thanks for everyone help. I rang Nationwide today and they told me that I wouldn't have to put up more than a 5% deposit as those were in the terms of the agreement and they cant just change it. I also wont get charged an early repayment fee as long as I transfer my mortgage over.
At least there's some good news for the bad situation I'm in :j

sammyjammy

It sounds like you actually mean you want to port your mortgage using an existing arrangement, this means you would need to find a house for the same price or cheaper, do you have finances to fund the move?