Porting over a mortgage, new builds, renting and selling

lucy2506

Hi all

Apologies if i do anything wrong on here, this is my first post.

Basically, I have a house that I would like to sell, we are in slight arrears but nothing major and can have this cleared before we put it on the market. The main problem is that I went to see my mortgage advisor yesterday and was told that although I would only like to move the mortgage over to a new build property of the same value, because of my current outgoings (which are the same as when we started the mortgage and now even less as have paid most off) and the amount of deposit, which is just below 10%, we cannot simply port over the mortgage to a new property. So going back and re-looking at everything again, we decided we would like to buy a smaller new build property which offers part of your deposit paid which would make up our deposit (if our house sold at the minimum amount) to just over 10%, yep great phoned up the mortgage company said that would be fine and it wasn't until I started the agreement in principle that i was then told that on a new build property you need a 20% deposit!!

So the situation is this, having looked at the perks that new buyers receive, would it be worth selling our proeprty, paying off some debt and sacrificing the early redemption payment, and going onto one of these new first time buyers schemes, basically having a 20% value of the property loan with the building company and then them finding us the 80% mortgage. Or would it be better to stick it out in our place for a bit. Obviously this would mean if we did do the first buy thing that we would have to sell, rent somewhere else for a bit (with 2 small dogs) and then look to do the first time buy.

We're completely stumped at the mo with this sorta malarky and would really appreciate anyones advice!

Thanks

AFK_Matrix

Umm maybe I am being dim here but how are you eligible for the first time buyers scheme in the first place if you already have a house??

And I also assume you know that new builds are overpriced and you will loose money as soon as you buy them etc?

kingstreet

As you're finding out, you can only port a rate, not a mortgage itself. When you move, your old mortgage ends and a new one is needed for the next property. This is subject to the lenders status, criteria and loan to value requirements now.

Many borrowers think portability gives them a guaranteed new mortgage when they move house. That's not the case.

The maximum loan to value for a newbuild is typically no more than 85% today. 80% for some lenders. You should ask yourself do you need to move? What caused you to fall into arrears with your mortgage payments? This is likely to prevent you getting a mortgage elsewhere and should always be avoided.

My best advice is to stay where you are and get your mortgage up to date and keep it there for at least a year. At that point you could revisit the idea of moving if it is more advantageous for you to do so.

GAH

OP, you won't be eligble im afraid as your not a first time buyer. Also if you read up on it, FTB that have gone for that scheme on here have regretted it.

To buy somewhere else, you are going to need at least a 10 -15% deposit (some 5% with higher interest rate available) and apply for a new mortgage.

If you have any debts this will be accessed against your affordabilty.

Alternatively renting is your other option.

If you don't have to move though, I wouldn't, as I wouldn't want tio have to pay a hefty redemption fee.

chopper78

FTB schemes require that nobody named on the mortgage application has ever had a mortgage before, ever. (Slight twist is that I am moving house and am getting an FTB mortgage because although I am not an FTB, my partner wasn't on the previous mortgage and so we qualify on that basis.) As I am porting the existing rate over, they will lend me at that rate for the remainder of the term up to the amount of the original mortgage. Because the new mortgage is larger, I need a second product to top the mortgage off. Whilst this second product has a lower rate than the fixed rate I am porting over, I only have a few months left on my original term which means that a significant chunk of my mortgage will revert to the much lower SVR next February and thus saving me a large wodge of cash.

However... If you haven't got a much larger amount of savings required for a new build because of the lower LTV band, then you need to either get the builder to contribute 5% as a vendor gifted deposit and find a bank that will do new builds at 85% and allow a vendor gifted deposit to be considered, or you'll just have to look at old houses.

Like for like, new builds cost more than the equivalent house on the second hand market, because you are paying for incentives and warranties not normally available on a second hand house. The mortgage company recognise this and hence the requirement for a larger deposit. Strangely, however, if I complete on a new build house today and then sell it tomorrow with a theoretical same day exchange and completion, then it wouldn't be a new build house and so wouldn't have the new build house restrictions.

Daft, eh?

lucy2506

Thanks for everyones help.

I didn't actually realise at the time of posting that it is not possible to be a first time buyer again even if you do rent for a bit, rubbish!

Looks like I'll be staying put for the meantime, get the arrears out the way and start again next year.

Thanks again

silvercar

Your credit rating will be affected by you building up mortgage arrears, so you may find that an even larger deposit is required.

klolav

We thought the same, that you to be a 'actual' first time buyer, however a friend of mine has just bought a shared equity scheme house on a first time buyer mortgage etc but she has owned before. Rented inbetween, but she isn't officially a FTB??
Is this just because it's shared equity scheme and FTB means different things to different people/companies??
Thanks

sonastin

Some "first time buyer" products are actually "don't currently own a house" products and are available to those who have sold and rented. It would help the property market a huge amount if they stopped using the "first time buyer" tag. After all, when you split up with your first (or any subsequent) lover, you don't go back to being a virgin again do you?!

lucy2506 wrote: »

we are in slight arrears but nothing major

I don't believe a mortgage lender would ever believe there is "nothing major" about mortgage arrears. It suggests that you don't prioritise keeping a roof over your head and it makes you a MAJOR risk for a new mortgage. Lenders have been tightening up their lending criteria over the past few years and this is going to count against you more than a default on any other debt would. You need to get these arrears sorted out ASAP and keep yourself up to date for a while before you think about taking out another mortgage.