Remortgaging whilst selling house.

Blue2moro

We are currently selling our house via part exchange for a new build.

We exchange contracts on the sale of our current house at the end of July and complete when our new property is built in January.

Our current mortgage rate is up for renewal in November.

My question is whether we would legally be able to renew our current mortgage on our current house to another fixed rate product in November, even though we have exchanged contracts and committed to sell it.

Our current mortgage, proposed remortgage and new mortgage "top up" will all be with the same lender.

The reason this makes most sense for us is that we have a much better LTV on our current property than we will have when we move so we'd like to fix the mortgage at the lower rate we can get on the current house before porting it to the new place and only getting a higher rate on the difference.

Is this allowed? Will the mortgage company care that we have exchanged contracts?

kingstreet

The only way you're going to get a reliable answer to this is to ask the lender.

Thrugelmir

Blue2moro wrote: »

Will the mortgage company care that we have exchanged contracts?

No, as the mortgage is secured on your current property. This will be discharged upon sale. The property you are buying is a complete new application. There's no guarantee that the lender will play ball with the porting of the rate.

holly_hobby

As stated, and I make clear every time, you port the mortgage product not the underyling mge borrowings .. which peeps still get confused with !

Regarding choosing a new product in November, you could seek a follow on product with your current lender (whom I am assuming you have applied for your new mge with ?) as I think the hassel of actually remortgaging to an alternative lender for the period of 3 mths, wouldn't benefit you.

EITHER WAY, whether your lender will agree to the porting of new November product, to your new mge and property which you aim to complete on in January 2014, remains at their complete discrection, and if they refuse (which they can and may), you will have early repayment charges on top of everything else, and for what 3 mths benefit of a rate lower than svr/bmr.

Personally, I would leave things as they are in Nov, and when you complete in Jan choose a rate from your lenders (whether thats a new provider or the existing one) available range at that time ... OR choose a follow on rate or remortgage product in Nov that has no ERCs or fees.

Hope this helps

Holly x

kingstreet

If your current deal ends in November, you are free to go to any lender you choose for your new mortgage. You aren't tied to the current one...

Blue2moro

Thanks all for your quick replies.

I think I've probably over explained and confused the situation.

In order to keep our mortgage payments as low as possible we want to remortgage this house for 5 years fixed, then port the mortgage to our new property. The equity in our current house is around 30% so we'd get a decent rate on a mortgage on this place. When we move and increase our mortgage, the equity will drop to around £20% so the rates aren't as good.

From your replies I now understand that we need to be very sure that the new product is portable (which we have been told it is) so we port the good rate to the new house and only the extra second charge is on the higher rate.

I just wasn't sure whether the mortgage company would have an issue with us securing a lower rate, then 3months later requesting to port the mortgage rate and add a second charge to buy the new place. Especially as we will have exchanged contracts by then.

As one poster suggested I guess asking the mortgage company is probably the most straight forward approach.

holly_hobby

The mge on your new house will be entirely new borrowings, there is no transfer of any debt from your existing home to the new one, as this will be redeemed when you complete the sale and the lender releases their charge. You only tsf the mge product, over its remaining term, on the same amount of capital it relates to at completion, and borrowings in excess of this amount will be placed on a product you chose from the lenders range at the the time of application and completion of your new mge and home.

As we say, thats assuming that the lender permits the port, which even where the product is stated as portable, can still be refused.

Tread carefully, I don;t want you to incur early repayment changes which will invalidate any benefit of the exercise (as I say look maybe look at penalty free deals to be on the safe side).

Hope this helps

Holly