What happens to mortgage when you sell before you buy?

Deladuro

Currently have a mortgage with RBS of £112Kish on a property valued at around 190K.
We're looking to move up the ladder a little, but in the current climate we thought it prudent to try to sell before purchasing another property (avoiding the worry of bridging loans etc)
But what happens to our current mortgage if we sell our home before finding another to which we can 'port' this mortgage?
Do we just repay the amount owed and discharge that mortgage?
Or is there some way in which we can hold onto the £112K (at a meagre 0.22%) until such time as we purchase a new property (which would only be a matter of weeks hopefully)? Would any lender let you do this to ensure loyalty?

I'll try to speak to RBS on Monday about this but would like to hear your opinions on what they're likely to say before then.

LoopyPrune

Are you locked into any early repayment clause?

Do you have accomodation ready incase your house does sell early?

Deladuro

Early repayment charge - 1% of capital sum outstanding if repayment made before 31st Jan 2010.

No accommodation ready as an eternal pessimist

LoopyPrune

Hmm it could get sticky but I do see that your aiming to become a cash buyer instead of a chain? But the problem is the lender needs to have security and you sat in rental accomodation looking for another property aint gonna set their world on fire. I would guess unless you are porting to another property they gonna make you terminate the present mortgage upon sale.

You say a few weeks but the people you purchase from could themselves be in a chain and if the chain fails then your gonna be still stuck in rental/family/caravan etc

Deladuro

I may be being naive here, but the whole chain thing doesn't seem to be as big a factor up here in Edinburgh.
Once you find a prospective property, missives are concluded quite promptly, usually within a couple of weeks - and with very few exceptions, there's no going back as the deal has effectively been completed.

Hopefully we won't be forced into panic buying if our flat does sell quickly - but I am resigned to the thought that we'll have plenty time over the coming months to find lots of suitable properties whilst waiting for an offer on our place.

SHOULDI

Hi Deladuro,

I sold my flat in June '07 and had to pay the ERC. I was with HSBC. but HSBC said if I found a place within six months, they would refund the ERC and offer the same mortgage (continuing the 5 year fixed rate) + offer me additional borrowing as a second portion of the mortgage.

I think what you have to weigh up is whether it's worth staying on your current deal + the extra borrowing you may require (at a different rate).

or

Whether to take the hit with the ERC and start with a fresh mortgage when you find your new house. This will give you access to all the lenders on the market and will mean you have no time limit to find your next house.


For us, it worked out cheaper to stay with HSBC and get the ERC back as we found another place within the six months and the rates offered on the market were no better than the rate we were on.

HTH

Rick62

Most lenders will allow 3 months gap in porting a mortgage, which they will then often extend to 6 months. However this is usually on a concessionary basis, so how concessionary they are feeling in the current market, and with a rate of 0.22% you will have to ask them!

Whatever they say see if you can get in writing, or failing that note what they say, the date and time and the name, title and department you spoke to.

martynh99

We had a one account mortgage with the RBS and are in the same situation - they've just kept the account open paying meagre interest until we find a new place.
Must point out that this a current account offset mortgage so is probably different in it's rules.

Deladuro

Thanks for all your opinions and advice.
It's funny the things that pop into your head in the early hours of the morning.....

If, and it is a big IF, we manage to sell our place and then find another quickly then I think we ask RBS for a 'further advance' of ?£50-80k which they lend at their SVR (4% currently) until the end of January next year when we can look at what the options are. Does this sound about right?