Remortgaging Within 6 Months

ncfcstar

Hi guys,

Just wondering if anyone could give me an idea of what this will cost me.

I have come to an arrangement which would see my girlfriend and I being able to purchase the house we want now with her father acting as a guarantor. This is due to the fact that she is qualifying as a teacher in September and despite the fact that she is obviously going to earn the standard teaching salary no one is prepared to offer us a mortgage yet.

The deal is a interest only mortgage, but with no early exit fees, so we could remortgage within 6 months, remove her father as a guarantor and get a repayment mortgage.

My question is this - obviously we want to get in our own house - we have a 25% deposit etc. so we're in a strong position to move. But does this deal put me out of pocket significantly enough to make it unattractive.

i.e. I will have to pay two mortgage arrangement fees within 6 months, two surveys, and as it is a new build the house price will undoubtedly drop. Currently on the market at £200k (although I have already done some negotiating on that price). Is there any other fees to factor in?

If someone could give me an idea of roughly how much this will cost me, including any depreciation in house value, I'd really appreciate it. As I wonder whether or not this is financially viable - as in do I lose too much money within 6 months, when I could wait a bit longer and just get a repayment mortgage.

Hopefully I have explained this well enough, it is confusing me, so I've probably confused you all now too!

Thanks in advance

The_J

If it's not cost effective to do within 6 months why don't you just stay with her father as guarantor? But my thoughts:

• You probably won't have to pay another survey when you remortgage.
• I doubt the house will drop that much in value.
• Have you considered waiting til September?

Simon_gloster

You have confused me!!! Not too worry.

Are you looking to change mortgage lenders or just get the guarantor off and buy another property? If so, it's not a remortgage it'll be a standard house purchase with you and your partner only.

ncfcstar

The_J wrote: »

If it's not cost effective to do within 6 months why don't you just stay with her father as guarantor? But my thoughts:

• You probably won't have to pay another survey when you remortgage.
• I doubt the house will drop that much in value.
• Have you considered waiting til September?

Thanks for responding

The main reason is that I want to start a repayment mortgage rather than simply an interest only mortgage.

AFAIK with a repayment you are only paying extremely small amounts of capital off in the first few years, but surely this is better than paying 0% of the capital with an interest only mortgage for an extended period of time (i.e. 12/24 months)? Or would the difference be negligible?

We have considered waiting until September, but ideally we would like to move in the Summer this gives us the opportunity of doing that. I'm asking the questions for that exact reason though, is it financially stupid to do this now when we could wait until later on in the year.

ncfcstar

Simon_gloster wrote: »

You have confused me!!! Not too worry.

Are you looking to change mortgage lenders or just get the guarantor off and buy another property? If so, it's not a remortgage it'll be a standard house purchase with you and your partner only.

Haha sorry! It will be to change mortgage lenders, and remove her father as guarantor. It will be the same property, so as far as I am aware as we would already be on the deeds of the house we could just remortgage?

Simon_gloster

ncfcstar wrote: »

Hi guys,

Just wondering if anyone could give me an idea of what this will cost me.

I have come to an arrangement which would see my girlfriend and I being able to purchase the house we want now with her father acting as a guarantor. This is due to the fact that she is qualifying as a teacher in September and despite the fact that she is obviously going to earn the standard teaching salary no one is prepared to offer us a mortgage yet.

The deal is a interest only mortgage, but with no early exit fees, so we could remortgage within 6 months, remove her father as a guarantor and get a repayment mortgage.

My question is this - obviously we want to get in our own house - we have a 25% deposit etc. so we're in a strong position to move. But does this deal put me out of pocket significantly enough to make it unattractive.

i.e. I will have to pay two mortgage arrangement fees within 6 months, two surveys, and as it is a new build the house price will undoubtedly drop. Currently on the market at £200k (although I have already done some negotiating on that price). Is there any other fees to factor in?

If someone could give me an idea of roughly how much this will cost me, including any depreciation in house value, I'd really appreciate it. As I wonder whether or not this is financially viable - as in do I lose too much money within 6 months, when I could wait a bit longer and just get a repayment mortgage.

Hopefully I have explained this well enough, it is confusing me, so I've probably confused you all now too!

Thanks in advance

Fab OK.

It is a straightforward re-mortgage. Be mindful you can't remortgage the property within 6 months of ownership, after that no issues.

Things to consider:

1) as you say, your 2nd lender may value it considerably less than what you paid, therefore decreasing the amount of equity available, thus higher rates.

2) Fee's. You can get free legals and free val with most big lenders as they want your new business, bit of an incentive. Arranagement/Product fees, well thats up to you or if advised, advised to pay one for a preferential rate.

ncfcstar

ncfcstar wrote: »

Thanks for responding

The main reason is that I want to start a repayment mortgage rather than simply an interest only mortgage.

AFAIK with a repayment you are only paying extremely small amounts of capital off in the first few years, but surely this is better than paying 0% of the capital with an interest only mortgage for an extended period of time (i.e. 12/24 months)? Or would the difference be negligible?

We have considered waiting until September, but ideally we would like to move in the Summer this gives us the opportunity of doing that. I'm asking the questions for that exact reason though, is it financially stupid to do this now when we could wait until later on in the year.

Also does anyone have any idea of the rough valuation change from new build price to price in 6 months. Is it a small depreciation (a couple of percent) or a significant change?

Thrugelmir

ncfcstar wrote: »

The main reason is that I want to start a repayment mortgage rather than simply an interest only mortgage.

You won't get an interest only mortgage without a repayment vehicle. in the current market.

Yorkie1

Another point which occurs to me - you say your OH is due to qualify in September. Does she already have a guaranteed job? Some lenders will want to see someone satisfactorily completed probation before they will lend, too.