Ive sold my house and buying a house for less than what i owe on my mortgage -

curlyboy

Hello all

Advice needed

I owe £94,000 on my house. fixed at 5.85% until Feb 1st 2014. with an exit fee of £2,500

I have now sold my house for £108,500, but 'Im buying a house for £95,000 with a 10% deposit leaving a mortgage of £86,500

The thing is will I be able to take my exsisiting mortgage to the other property ? or will I have to pay off my mortgage and take a new one on?

Will I be charged an exit fee?? how will it work

many thanks

Thrugelmir

The existing mortgage will be settled upon sale of the property. You'll need to obtain a new mortgage on the property you are buying.

The nature of any fees on your existing mortgage will depend on the product you have. At the very least they'll be a discharge fee of £100 to £300.

curlyboy

Will they charge me an exit fee or can they compromise with me

kingstreet

If you've sold for £108,500 with a remaining mortgage of £94,000, on completion day, your solicitor will repay your existing mortgage, any discharge fee, pay himself and the estate agent and anything left over is available to you as your deposit for your onward purchase.

If we assume sols fees at £450 + VAT for the sale alone and EA fees of 1% + VAT, that will mean a deduction of £1,842. That leaves £12,658.

If you take out a new mortgage with your existing lender, you may be able to "port" the rate from the old mortgage to the new one, to avoid the payment of a penalty. However, your new mortgage will be £85,500 (not £86,500!) so you will have to pay a proportionate penalty on the £8,500 reduction from one mortgage to the other. You'll need to calculate the difference, or obtain a settlement figure from your lender, based on these figures.

As you say, you'll need £9,500 deposit, plus solicitor's costs and mortgage fees. By the time you'e finished, you'll probably break even, or could need to put some money in to balance the books.

curlyboy

Many thanks

My estate agent charges £1,500 all in including VAT
Sols fee £1250 all in

So what do you think the proportionate penalty on the £8,500 reduction from one mortgage to the other will be roughy

many thanks for your help

holly_hobby

Your lender will be able to tell you to the penny, anything else would just be guess work from our part.

Holly

kingstreet

That would need you to tell us your lender's penalty formula for your mortgage. There is no "roughly," it could be anything;-

x number of months interest
y% of the amount redeemed.

As £8,500 is 9.04% of your current mortgage balance, the proportion will be 9.04% of the full ERP which would be payable if you did not port the rate.

curlyboy

thanks for the advice peeps
I will call my mortgage provider tomorrow