Early Repayment Charge

clairecymru

In April 2009 I took out a three year fixed rate mortgage with Nationwide at 4.38%. We were told that we had a rate of 4.38% because we had a 25% deposit. Our flat cost £115,00, so we had a mortgage for £85,750.

However, in reality we did not have a 25% deposit because that was paid for by Bovis Homes as part of a shared equity scheme whereby we have an interest free loan for 5 years and have 10 years to pay them back.

We now want to move. The early repayment charge is over £3,000.

The property we are looking to buy costs £120,000. The current market value of our flat is £140,000. So after we have paid Bovis back their 25% we will have just under £19,000 to put down as a deposit on the new place (providing we get what the flat is worth).

My question is, will we have to pay the ERC to Nationwide if we take out our new mortgage with them or can we just transfer our mortgage onto our new property, but we obviously will not have a 25% deposit like we did last time.

Also we currently live in Wales and are looking to buy in Scotland. This might sound really stupid but is housebuying the same in Scotland as it is in Wales.

Will i have to pay stamp duty now that I am no longer a first time buyer?

Hope this makes sense.

antrobus

You bought a flat in April 2009 for £115,000 and it's now worth £140,000 some eighteen months later? I'm sure I'm not the only one who might be a tad sceptical that your flat has increased in value by over 20% in the current market. I'm not saying that it's impossible, but anyone who had a look at http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/regions/html/region4.stm
might well raise an eyebrow or two.

Anyway.....

My question is, will we have to pay the ERC to Nationwide

Only Nationwide can really answer that question

is housebuying the same in Scotland as it is in Wales.

No. Scotland has it's own legal system.

Will i have to pay stamp duty now that I am no longer a first time buyer?

No, not if the property you are buying is selling for less than £125,000.

ManicMum

I would say you need to check if the deal you are on is portable. If not, then you will need to pay back the penalty charge.

You would need to still satisfy the terms of the mortgage though ie. retainiing 25% deposit on the property.

Yes, house buying in Scotland is different. Different legal system too.

Yes, you will need to pay stamp duty at rate of 1% if property over £125k. There are some areas in Scotland that qualify for disadvantaged areas relief. You can view these on HMRC website. Check if you will be in one of those.

clairecymru

antrobus wrote: »

You bought a flat in April 2009 for £115,000 and it's now worth £140,000 some eighteen months later? I'm sure I'm not the only one who might be a tad sceptical that your flat has increased in value by over 20% in the current market. I'm not saying that it's impossible, but anyone who had a look at http://news.bbc.co.uk/1/shared/spl/hi/in_depth/uk_house_prices/regions/html/region4.stm
might well raise an eyebrow or two.

This may be because in April 2009 the asking price was £140,000 but because there was many empty new build flats in the area at the time the surveyor for the mortgage company valued the flat at £115,000 after we had put an offer in for £130,000. Bovis homes then reduced the price. Since then all the flats in the area have sold and it is a very desirable place to live. The local estate agents in the area have put flyers through our door saying that there is a lot of interest in the area and to be in touch if we wanted to sell.

Thrugelmir

clairecymru wrote: »

Bovis homes then reduced the price. Since then all the flats in the area have sold and it is a very desirable place to live.

An interest free loan to fund a 25% deposit was a serious inducement to sell the other properties.........

antrobus

clairecymru wrote: »

This may be because in April 2009 the asking price was £140,000 but because there was many empty new build flats in the area at the time the surveyor for the mortgage company valued the flat at £115,000 after we had put an offer in for £130,000. Bovis homes then reduced the price. Since then all the flats in the area have sold and it is a very desirable place to live. The local estate agents in the area have put flyers through our door saying that there is a lot of interest in the area and to be in touch if we wanted to sell.

Fair enough. But the fact that "all the flats in the area" have now been sold, rendering the area "very desirable" and that the local estate agents are now touting for business doesn't mean to say that your flat will sell for the same number as thought up by someone at Bovis Homes eighteen months ago.

I'm not saying that you're wrong. I'm just saying that you shouldn't just assume you can now get £140k for it. You should get some valuations do some research etc. Otherwise if you base your entire plans on being able to sell at a profit which you can roll forward as a deposit on the next property, you just might end up disappointed.

clairecymru

antrobus wrote: »

is housebuying the same in Scotland as it is in Wales.

No. Scotland has it's own legal system.

what are the differences?

jamesd

clairecymru wrote: »

The local estate agents in the area have put flyers through our door saying that there is a lot of interest in the area and to be in touch if we wanted to sell.

That's just estate agents trying to generate some business.

Cannon_Fodder

If in 2009 the flats sold for £115k, then that was the real value...and is also the start point from which you adjust the price by subsequent house price movement...

Wales is +5.75% approx, since April 2009;

[IMG]http://www1.landregistry.gov.uk/houseprices/housepriceindex/report/default.asp?g=1&gt=1&a=Wales&s=01 April 2009&e=01 October 2010&t=1[/IMG]


Making the flat worth £122k approx.

If you want to give the start of your postcode, we can find stats for your locality - there are some good and bad pockets within Wales, so it might be better than that.

Have you checked Rightmove for what other nearby properties are trying to sell for? Or www.houseprices.co.uk for what has actually sold recently?

As others have said, it would be foolish to bank upon a certain figure, without doing your research - it would only lead to disappointment.

beecher2

clairecymru wrote: »

what are the differences?

Too vast to explain on a forum. You may find it wiser to sell up and rent in Scotland before buying again - you could ask Nationwide if you'd be able to get the ERC reimbursed if you bought again with 6 months as I've read on here that a lender allowed that, but don't remember who.

ginvzt

beecher2 wrote: »

Too vast to explain on a forum. You may find it wiser to sell up and rent in Scotland before buying again - you could ask Nationwide if you'd be able to get the ERC reimbursed if you bought again with 6 months as I've read on here that a lender allowed that, but don't remember who.

Nationwide allowed us 6 months to buy the new house. We haven't bought it though and have been renting for over 2 years. We have only bought the house 4 weeks ago, and we didn't take out the mortgage with Nationwide again, as the rates where not so good.