Can I change a mortgage right after the house purchase?

Fly_Baby

Days after we exchanged I found out that some banks have launched good fixed-rate mortgages - such as 3,49% for 5 years, whereas our current deal is tracker 2,49% above BOE base rate.

In order to change to this new mortgage, we will have to add a bit more from our savings to make up LTV 75%, and there will be an arrangement fee (995), valuation fee, etc. Our current mortgage was fee-free. The mortgage offer was issued in May.

Would it make sense to switch? Can I even do it so soon after the purchase (of course after the completion)?

tleefox

Without paying massive early redemption charges, I would seriously doubt it.

Fly_Baby

tleefox wrote: »

Without paying massive early redemption charges, I would seriously doubt it.

I don't have the paperwork right now to double-check but one of the conditions of the current mortgage is that we can switch at any time without penalty - it is a lifetime tracker.

theartfullodger

As tleefox says - you are of course at liberty to change but may be charged..

Why ask here for the answer when you have all that paperwork explaining the terms of your mortgage and the 'phone numbers of the advisers you have been dealing with.


Strangely I cannot read the terms of your particular deal from here: Mortgage deals do vary considerably as regards charges, penalties etc etc..

Fly_Baby

theartfullodger wrote: »

As tleefox says - you are of course at liberty to change but may be charged..

Why ask here for the answer when you have all that paperwork explaining the terms of your mortgage and the 'phone numbers of the advisers you have been dealing with.


Strangely I cannot read the terms of your particular deal from here: Mortgage deals do vary considerably as regards charges, penalties etc etc..

I understand about the charges and penalties, obviously, and they will be easy to take into account - but are they the only thing to think about?

How about going through another mortgage application process so soon - could the new bank be concerned that my current mortgage has just started? Or having another credit check? Anything else?

It is my first mortgage hence my call for advice from more experienced home-owners.

tleefox

Fly_Baby wrote: »

How about going through another mortgage application process so soon - could the new bank be concerned that my current mortgage has just started? Or having another credit check? Anything else?

I was told by our mortgage advisor when we took out our first mortgage that after you have taken out a mortgage something called a spike is placed on your credit file which does not allow you to take out any further credit for a certain period of time.

This may be total balls, but if it is true this may affect you.

JoeA81

You are right in that there is nothing in theory stopping you from re-mortgaging. The only thing you might need to check is that some mortgage companies need you to have owned the house for at least 6 months before they will offer you a re-mortgage.

I actually re-mortgaged 7 months after completing on my new house last year, I was in exactly the same position as you - I had an HSBC lifetime BOE tracker with no exit fees or payment penalties whatsoever, and I decieded to move to a First Direct mortgage with a £99 fee, but first direct were offering £100 to switch to their current account, so all it actually cost me to move the mortgage was the £99 survey fee!

The only thing I would strongly advise you to condsider is that re-mortgage valuations are almost always lower that the "purchase" valuation. First Direct valued our house £15k under the price we had paid for it 7 months previously. We were prepared for this, and still were able to get the deal at the LTV required, but you have to be aware that this will happen.

Fly_Baby

tleefox wrote: »

I was told by our mortgage advisor when we took out our first mortgage that after you have taken out a mortgage something called a spike is placed on your credit file which does not allow you to take out any further credit for a certain period of time.

This may be total balls, but if it is true this may affect you.

Thanks - that's the kind of thing I was worried about. Did your mortgage advisor say anything about how long it is placed for and is there a way to find out?

Fly_Baby

JoeA81 wrote: »

You are right in that there is nothing in theory stopping you from re-mortgaging. The only thing you might need to check is that some mortgage companies need you to have owned the house for at least 6 months before they will offer you a re-mortgage.

I actually re-mortgaged 7 months after completing on my new house last year, I was in exactly the same position as you - I had an HSBC lifetime BOE tracker with no exit fees or payment penalties whatsoever, and I decieded to move to a First Direct mortgage with a £99 fee, but first direct were offering £100 to switch to their current account, so all it actually cost me to move the mortgage was the £99 survey fee!

The only thing I would strongly advise you to condsider is that mortgage valuations are almost always lower that the "purchase" valuation. First Direct valued our house £15k under the price we had paid for it 7 months previously. We were prepared for this, and still were able to get the deal at the LTV required, but you have to be aware that this will happen.

Thank you - I guess this should be in T&C of the current mortgage.

I too was worried about the valuation but the current mortgage provider valued it at exactly the purchase price. Then we did the survey and the price was re-negotiated so the purchase price is actually 3% lower than the valuation and is in line with the current prices in the area. So we will probably be allright there.

_Andy_

If you're changing lenders, most lenders won't do it until you've owned the property for 6months+

Fly_Baby

So does it mean that I cannot even apply for a mortgage until after I've owned it for 6 months? Or can I apply now, process the paperwork and secure the deal which, I understand, is valid for 6 months, and then wait and switch only after 6 months have expired?