Mortgages that DON'T have an early repayment charge

moneybunny123

We currently own two homes - one that we live in, and one that we rent out. We're currently trying to sell the home we live in and once sold, will move into the house we rent out. However, we then wish to redecorate this house, sell it as quickly as possible, and then move into rented until the house we want to buy is built (still at planning stage).

My question is this - we need to borrow an additional amount for our rented home, and will probably go to a different lender than we're currently with (the Halifax). However, because we intend to sell quickly (within 6 months) and therefore pay the mortgage off, it would be nice to have a mortgage that doesn't have an early redemption fee.

Does such a thing exist? if so, does anybody know which building societies offer products like this - but still have a low rate? (I know, cake and eat it springs to mind)

TrickyDicky101

Some tracker mortgages don't that I'm aware of (eg HSBC's market leading tracker @ +1.69% above BoE BR doesn't). Fixed rates likely will have an ERC.

Senior_Paper_Monitor

Yes there are, but much more detail necesasry to suggest a source - sounds like an ideal case for a no ERC offset BUT I am would not recommend a solution without chapter and verse available.

moneybunny123

Offset mortgages? Don't you need hefty savings in order for those to really work? (which I don't have)

Senior_Paper_Monitor

NO you need fluctuating income and adhoc lump sums + the potential need to reuse all/some of that money - you seem to have that.

I repeat "I am would not recommend a solution without chapter and verse available".

moneybunny123

Well, it's a long and complicated story. I have 2 properties - one is our home (mine and hubby) the other is currently my home (only my name is on the mortgage) and we rent it out. The house is only 75% owned by me though - it was bought under shared equity, and when I couldn't sell it the developers granted me permission to rent it out. However, I've had it valued and the developers have come up with an affordable settlement fee for their 25%.

Our home is on the market. We have an offer on it, and should it all go through in the next month, we will be sitting on quite a bit of equity that we intend to bank until the home that we want to live in is built (but this wont be for another year). Meanwhile, we'll move back into the house that I rent out (that also has a lot of equity which is why we want to sell).

We could use the equity from our home to pay off the developers (assuming it all goes through on time). If not, the way I see it is I either go to the Halifax to borrow the money I need to pay off the developers - OR i borrow from elsewhere, pay off the Halifax (including their ERC) and husband and I continue with that mortgage until the 2nd (rented out) home sells. We could however, pay off the whole mortgage on our 2nd home as soon as our 1st home sells.

We're really not sure what to do for the best.