"Let to Buy" Transaction - Timing of Mortgages to Avoid Early Repayment Fees

quasimodo321

Hi all,

My wife and I have a residential mortgage with First Direct on a central London flat that we currently reside in. The flat is valued at £320k and our mortgage outstanding is £185k. As we now need a bigger place, we're looking to buy a house in the outskirts of London, move into this property and rent out our current flat.

To this end, we've got a BTL mortgage offer agreed in principle from Natwest on our flat to borrow £208k from them. We've also got First Direct to agree in principle to port our mortgage to a house valued for up to £350k at 85% LTV. We're looking to use £50k of our own savings in this transaction.

Our existing residential mortgage with First Direct has an early repayment charge of £4,500 payable until end of January 2013. (This is the main reason why we're looking to port our mortgage with them rather than going with another residential mortgage lender.)

Now, I've got a question:

In order for us to be able to buy the house that we'd like, we need to be able to raise an equity of £23k from our current flat. However, if we complete the Natwest BTL mortgage ahead of the FD residential mortgage, then the £4,500 early repayment charge will apply. So it would appear that we need to complete both mortgages at the same time.

Having not been through such a process before, can someone please advise as to how feasible it is for us to complete both mortgage transactions simultaneously in order to avoid triggering the early repayment charge?

Sorry if this is a trivial question, but would really appreciate your input.

Many thanks in advance.
Regards.

Thrugelmir

quasimodo321 wrote: »

So it would appear that we need to complete both mortgages at the same time.

Correct.

Providing you have both mortgage offers in place prior to exchanging on a new property. Then your solicitor will be able to deal with the monetary aspects of the transaction.

quasimodo321

Thanks for your comments.