Part Exchange Question

mikioninja

Hey,
I feel that this may be a really stupid question, but i have no idea.
I am a first time buyer, but my partner isnt and he currently has a property. we are thinking about doing a part exchange but i really really dont understand what type of mortgage we would have to get to make it work.
Is it just a case of remortgaging on the mortgage that he already has? or is it a completely new mortgage that we get?


Thanks

kingstreet

The mortgage will end on the old property when the builder takes possession of it. You will need a whole new mortgage on the new property. It's your decision whether you want to stay with the current lender or move to a new one.

For example, your partner may be able to transfer the rate from his old mortgage to the new one if it's worth keeping and if you can both satisfy the current lender's criteria for the new purchase and it will accept you as a joint applicant. Otherwise, a new lender may offer you both a better deal.

Evilm

It works exactly the same as selling your house to Person A and buying a new house from Person B. The only difference is how the physical money moves.

Instead of the whole purchase prices moving from A to you to B they will offset your current house price against the new one and whoever is trading up will pay over the difference over. The benefit of the part exchange is that you don't have as many parties to deal with.

Eg:

Your House :£100k
Your current mortgage redemption: £50k
The New House £110k
The New Mortgage: :£65k

Your New Mortgage Company sends £65k to your solictors
Your solicitors would send the solicitors for the other party £10k.
Your Solicitors would send the Old mortgage company £50k
The remaining £5k would be used on fees and any balance sent on to you.

If you have a portable deal with your current mortgage then it would work slightly differently but the basic process stays the same.