Condensing Mortgages & Properties

ha08nah

Hi,

I'm new to the forum so apologies if I have posted in the wrong place.

Both my partner and myself have a property (and mortgage each).

We would like to sell both properties and by one together, but how do we combine our mortgages?

Thanks.

Hannah.

Wh05apk

You don't you, you repay your existing ones when you sell, and take out a new joint mortgage, if either of you are tied in to existing deals with penalties, you should look into staying with the same lender and porting the deal to avoid any penalty.

ha08nah

Thanks for the quick reply.

I realize that we could get a joint mortgage, but we are both tied in, and both with different lenders, so surely that means we have an issue?

Thanks.

ACG

You have 2 options if you need to sell, pay the ERC's and move on or you could sell both properties, pay off one of the mortgages, port the other mortgage over to the new property and take out any additional borrowing with that lender.

Short of that your only other options are to rent the properties out until the deals finish and then sell? But that may stop you buying now if your relying on the equity.

ha08nah

Great, thanks for the advice.

getmore4less

ha08nah wrote: »

Thanks for the quick reply.

I realize that we could get a joint mortgage, but we are both tied in, and both with different lenders, so surely that means we have an issue?

Thanks.

How long are the tie ins, it may actualy not be an issue when it comes to actualy trying to sell.

Optimum stratagy will depend on the details of the deals, current and follow on interest rates, equity in the properties, potential rental yields...

ha08nah

Ok, phoned RBS (my lender) who won't port the mortgage to First Direct (my partners lender) if we sold my property, to then sell his, and buy another.

Mine is tied in until 31/03/14, and his is tied into 22/05/14.

They both have % ERC's.

kingstreet

You seem to be misunderstanding how this works.

You can only have one "first charge" residential mortgage on a property. You are therefore going to have to decide which of the two current lenders you want to provide your new joint mortgage on your new home.

Once you have applied, you should be able to port the rate from the current mortgage with that lender to the new one, with any increased borrowing being taken on one of the lender's current products.

The other mortgage, with the other lender, will be paid off when that property is sold and any early redemption penalties paid at completion.

I guess it would be sensible to go with the lender which charges the highest ERP, so you avoid paying the greater amount of penalty, but you need to consider the rate you will be giving up. Ideally, you want to keep/port the best rate/highest ERP product.

ha08nah

I understand everything that has been written, but it has been suggested by a solicitor that in some circumstances, mortgages can be merged. Obviously this isn't very common as no one has suggested it as an option on here.

Thrugelmir

A mortgage is merely a loan by another name. The term mortgage actually relates to the charge that is placed on the property to secure the debt.

I was in a similar position myself some years back. So sold my property first. Took the hit on all the charges of sale. Then used the equity to overpay my partners mortgage to the maximum allowed. Until hers became free of an ERC. Then sold hers and bought another.

While paying an ERC may not seem particularly paletable. Your major concern should be selling one of the properties. As may take time. In the process you'll still be paying interest on the outstanding debt.

kingstreet

ha08nah wrote: »

I understand everything that has been written, but it has been suggested by a solicitor that in some circumstances, mortgages can be merged. Obviously this isn't very common as no one has suggested it as an option on here.

You can merge a mortgage?

Really?

Hm. Solicitors.

A mortgage is a legal charge over a property, so I can't see how it could be merged. Although many people seem to think you can transfer a mortgage from one property to another. Again, that's not possible.

Like I said, you are going to have to decide which one is the best one to keep, or conversely which is the cheapest to lose...

Either way, only one of the rates you have can be transferred to a new joint mortgage and that's a new joint mortgage with the lender of that particular rate.

First Direct can't port a rate to a RBS mortgage, or vice versa.