Mortgage/Deposit Question and options - Moving to cheaper house

alex_h_5

Hi all, first post and apologies if this has been asked before.

We are selling our house and relocating. We have an offer of £260,000 for our house and are looking at a house at £235,000. Our current outstanding mortgage is circa £200,000 with 2 years left on a fixed rate @ 4.79%. We have been given the option to carry forward this mortgage.

we have worked out that selling our house for £260k gives us about £50k left over for a deposit. Once fees etc are taken.

Question - Do we keep this mortgage and the 4.79% rate, putting a £35k deposit down...putting the remaining £15k into savings, making overpayments as and when appropriate? Or can we pay the £15k straight off the mortgage as an overpayment or early repayment and therefore risk charges...is it worth it? Is it possible to do that?

Or,

Do we get a new mortgage for £185k...therefore having a £50k deposit? But we've only been offered a 5yr 6.43% or a 2yr 5.99% fixed rate, plus paying the fee for early repayment on the existing arrangements.

Are there any other options that we've overlooked?

Many thanks for looking

Mortgage_Help_4

First of all calculate your early repayment charge as it could be around 3% i.e. £6,000 and if so then you are better porting accross the current deal to avoid early repayment charges. Your loan to value (LTV) looks like 78.72% based on the £185K figures and the best deal you could hope for would be 4.75% Fixed 2 years with a £475 Fee therefore sticking with what you have seems best for now. If you could put down another £8,750 or thereabouts you could bring your LTV to 75% and obtain a 2 year fix for 3.84% and a Fee of £595.

In summary check your penalty and you could probably be allowed to overpay with your existing lender by 10% of your mortgage balance each year which would take all of your £15K but this is wise only if your mortgage account is on a daily interest basis and if not find out from lender what month they calculate the balance (most lenders are now charging interest daily) and pay one month prior to this, whilst retaining money in a say 60 or 90 day building society account or something similar.