Tracker Mortgages

chimmychango

Hi

Was looking at buying a house to purchase, renovate and sell. I work in the building trade so was going to do most of the work myself to cut down on costs. I now have enough money to put down a 50% deposit on a house.

I was looking at mortgages available without early repayment fees so as to avoid lots of costs when it came to selling the house and so that i am not tied into a mortgage for a couple of years. I have come across "lifetime tracker mortgages" from hsbc with no early repayment fees, no booking fee and no exit fee. Would this be a suitable mortgage for my house renovation project and are these types of mortgages really "no fee" as advertised?

All advice welcome

Thanks

Wywth

chimmychango wrote: »

Hi

Was looking at buying a house to purchase, renovate and sell. I work in the building trade so was going to do most of the work myself to cut down on costs. I now have enough money to put down a 50% deposit on a house.

I was looking at mortgages available without early repayment fees so as to avoid lots of costs when it came to selling the house and so that i am not tied into a mortgage for a couple of years. I have come across "lifetime tracker mortgages" from hsbc with no early repayment fees, no booking fee and no exit fee. Would this be a suitable mortgage for my house renovation project and are these types of mortgages really "no fee" as advertised?

All advice welcome

Thanks

Are you planning to live in the property as your main home whilst you own it?

chimmychango

Well i'm renting at the moment, and would ideally like to stay renting while renovating it; but would be prepared to move in and give my notice on the rented property if this would make a difference.
Would not living in the property effect the costs involved?

Wywth

chimmychango wrote: »

Well i'm renting at the moment, and would ideally like to stay renting while renovating it; but would be prepared to move in and give my notice on the rented property if this would make a difference.
Would not living in the property effect the costs involved?

Without looking at the detail, I suspect the mortgage is for someone that intends to be an owner occupier.
If that is not your intent, then you will probably be ineligible for this product.

You probably require some form of commercial mortgage for the business venture you plan to undertake.

chimmychango

Thanks for the response.
I would be prepared to move into the property while renovating in order for it to be a legitimate owner occupier mortgage.
However if the mortgage is no early repayment charge, no exit fee and no booking fee, what exactly are the banks getting out of the mortgage deal should some one sell up early i.e. within 6 months (except of course: 6 months worth of interest payments)? Seems like there's not that much in it for them which i why i was wondering if there is usually any clauses or additional charges that prevent you from doing this.
Thanks

Yorkie1

On the specific 6 months point you mention, you should be aware that a buyer will have difficulties raising a mortgage if you sell within 6 months. (I think this means complete within that time).

Also, will the property be inhabitable from the outset - i.e. will it have a kitchen and bathroom? If not, then it won't be mortgageable on a residential mortgage.

kingstreet

Yorkie - Halifax won't accept an application within six months of an ownership change.

In general others will investigate, possibly delaying completion, while others ignore the six month issue completely.

Yorkie1

Thanks for the clarification Kingstreet.

kingstreet

chimmychango wrote: »

Hi

Was looking at buying a house to purchase, renovate and sell. I work in the building trade so was going to do most of the work myself to cut down on costs. I now have enough money to put down a 50% deposit on a house.

I was looking at mortgages available without early repayment fees so as to avoid lots of costs when it came to selling the house and so that i am not tied into a mortgage for a couple of years. I have come across "lifetime tracker mortgages" from hsbc with no early repayment fees, no booking fee and no exit fee. Would this be a suitable mortgage for my house renovation project and are these types of mortgages really "no fee" as advertised?

All advice welcome

Thanks

If the key facts illustration says there are no fees payable, that's the best you are going to get.

It's worth bearing in mind, if you do a couple of these a year, you're going to find it difficult to defend a claim by HMRC that you are a professional property developer when they want to tax you on the "income" you are generating by renovating and flipping these properties.

Let_Us_See

There is nothing to stop you completing your plan exactly as you describe. Similarly, a lender cannot force you to immediately move into the property following completion as many will testify. For you the "Halifax" reference is a complete red-herring as you will be selling.

A fee free mortgage with no redemption penalty too good to be true? Not necessary, but check lender's T & Cs as there is often a clause that if you redeem the mortgage within X months then you may have to compensate the lender. This will be clearly stated on the KFI which should be available before committing yourself to an application.

kingstreet

Let_Us_See wrote: »

For you the "Halifax" reference is a complete red-herring as you will be selling

It has implications if his buyer just happens to be applying to Halifax, when the OP hasn't owned the property six months or longer.