Mortgage Trap

kingpin20

Help!

We bought our house some 3 years ago with, what we thought at the time, was a very good mortgage product from First Direct (lifetime tracker at +0.35%). We've made some good equity on the property and now want to use that to relocate and buy a new, bigger property, without borrowing any more money. We also need to relocate due to me starting a new job.

The mortgage was sold as being portable, however, since we took it out we've had children and my wife is not working. FD have advised us that, whilst we can transfer the mortgage to a new property, we would only be able to do so based upon a single income, despite the fact that we can afford our current payments.

So, our options are now to either downsize (considerably) or let our property and rent one in the area we want to move to until such time as my wife returns to work, thus allowing us to transfer the full mortgage to a new, bigger, property...or so we thought....

FD have told us that we're not allowed to let our property as, "they don't have a license for buy-to-let mortgages". If we did, we would default on the agreement and have to pay back the mortgage in full, immediately.

In effect, we're stuck. It's no wonder the property market is collapsing, but that's another discussion all together.

I can't believe that, even thought we don't want to borrow any more money, are looking to secure our current mortgage against a higher valued property, have no other debts and have demonstrated over several years that we can make the repayments, we can't move! And I'm probably going to have to turn the job down too if we can't move.

Can anyone advise if there is anything we can do, save selling up and bunging the equity in a savings account for another day at the risk of not getting back on the property ladder.

Many thanks!!!

beecher2

Selling up may well be your best option.

Porting isn't ever guaranteed and if you don't fit their lending criteria I'm not sure what else you can do as any lender will only count your income.

As an aside, are you sure you've 'made some good equity' in the last 3 years?

JQ.

I must admit I don't think they are being unfair. I'm guessing you wouldn't be able to get a new mortgage with any other lender because of the single income, why should they be any different.

Sounds like the best option is to sell up and move into rented until your wife is back at work. There would be advantages to that when moving into a new area - you get time to assess where exactly you want to live permenantly and when buying you're in a really strong position as you're chain free.

nb73

I'm guessing the problem here is that the horizon changed so much since you got your loan, it is now hurting your lender & they may want to lose you.

One way of looking, at 0.85% you have had a VERY good deal for a few years. You won and FD lost. Take it to the bank- if you need to move then sell up, buy smart and get the best available current rate from the range of lenders, probably fixing too.