Moving house - when to apply for mortgage

BristolExile

Hi

When buying a house - when do you have to apply for a mortgage?

We want to leave it as late as possible as we will be moving house and may wish to minimise the ERC for moving to a new mortgage. (Dropping at a rate of c.£140 a month)

Does a mortgage need to be in place before other things can start moving or can it be done almost on the completion date? I cannot remember!

Our rational for incurring the charge (of c.£5k) is that we are on a stonking 5.49% at the mo and can hopefully get around 2.5% with a new mortgage (30% deposit) which would drop our monthly repayments by around £150+ a month and therefore clawing back the £5k in around 3 years.

We would probably be happy to stay with current provider for ease (HSBC)

Any advice gratefully received.

Cornucopia

You need to get agreement in principle for the new loan to be taken seriously by vendors/estate agents.

However, the existing loan won't be redeemed until legal completion (which could be 2-3 months down the line).

Dave_the_Ginger_Cat

I'd apply now, so you're sure what you're dealing with

It will not affect the ERC until completion day, which is a long way off just yet

Stufrog

Cornucopia wrote: »

You need to get agreement in principle for the new loan to be taken seriously by vendors/estate agents.

However, the existing loan won't be redeemed until legal completion (which could be 2-3 months down the line).

When you talk about loan you mean the mortgage right? It is seriously 8-12 weeks to complete the mortgage application? I thought it was a lot quicker. But I suppose it depends on the applicant's credit scoring.

carolineb23

I think the previous poster means its 2-3 months until the transaction is completed, ie the house is actually sold. The redemption penalty is only payable at this point as you would need to continue paying your current mortgage during the selling process.

Cornucopia

Yes - exactly that.

The timeline is something like this:

- Now - Get agreement in principle for the new mortgage for your anticipated new home

- Next 2 weeks - Find your new home

- Then - Complete the Mortgage Application to get the funds approved against the property concerned.

- 3-4 weeks from now - Survey

- 5-6 weeks from now - Exchange of Contracts - entire transaction is now committed.

- 6-8 weeks from now - Legal completion, moving day. Old mortgage is redeemed and ERC is payable.

These are aggressive dates, and various factors can cause the process to go much more slowly than this.

BristolExile

Splendid. Thanks Cornucopia. All quite obvious really when you think about it!

exarmydreamer

Cornucopia wrote: »

Yes - exactly that.

The timeline is something like this:

- Now - Get agreement in principle for the new mortgage for your anticipated new home

- Next 2 weeks - Find your new home

- Then - Complete the Mortgage Application to get the funds approved against the property concerned.

- 3-4 weeks from now - Survey

- 5-6 weeks from now - Exchange of Contracts - entire transaction is now committed.

- 6-8 weeks from now - Legal completion, moving day. Old mortgage is redeemed and ERC is payable.

These are aggressive dates, and various factors can cause the process to go much more slowly than this.

This is very interesting, thank you for posting this.

Just a couple of questions if I may:

How does selling your old home fit into this schedule i.e selling/offer on your house then organizing a mortgage for a house move?.

We have found a lovely house but have not put ours on the market yet as finishing a few bits of DIY off. We were on a 5 yr fix till Jul 12 but are now on a SVR rate and overpaying. Will probably move to fix rate on moving house, so need to shop around for decent rate but when to apply?.

Is it a case of sell ours and organize mortgage before viewing new house? also

Do we have to accept an offer on ours before viewing/making an offer on someone else's home?.

We wish to move house but don't know the procedure as we moved from Army married quarters to our own first home and now want to move to a larger residence.

Sorry to butt in on this thread.:o

It is probably straightforwards but we are worried about messing things up. Thanks in advance for your advice.

Yorkie1

exarmydreamer wrote: »

We have found a lovely house but have not put ours on the market yet as finishing a few bits of DIY off. We were on a 5 yr fix till Jul 12 but are now on a SVR rate and overpaying. Will probably move to fix rate on moving house, so need to shop around for decent rate but when to apply?.

Is it a case of sell ours and organize mortgage before viewing new house? also

If you need the funds from the sale of your current house in order to buy the new house, then yes you should ideally have accepted an offer on your current house before viewing new houses - or at least before making any offers on one.

You can get a mortgage in principle at any time; this just sets out how much a lender is likely to lend you based on the info at that time. You don't actually apply for a mortgage until you've made an offer on a new place which has been accepted.

Do we have to accept an offer on ours before viewing/making an offer on someone else's home?.

There are various opinions on this. Some sellers want anyone to come round; others don't want to waste their time with timewasters who are not proceedable. If you have not accepted an offer on your property then you are not proceedable. You can always either make an offer and it be left on the table until you're proceedable, or at least register your interest until you are ready to buy.

This all presumes you need to sell in order to move.

We wish to move house but don't know the procedure as we moved from Army married quarters to our own first home and now want to move to a larger residence.

Sorry to butt in on this thread.:o

It is probably straightforwards but we are worried about messing things up. Thanks in advance for your advice.

As above. Not sure if the Army background makes things any different, though.

Cornucopia

Amended timeline as follows:-

- (Now - 4-10 weeks) - market your existing home, and get an idea of how the figures (sale price - o/s mortgage) will work with respect to your intended new purchase.

- Now - Get agreement in principle for the new mortgage for your anticipated new home. (In the case of a home move, you may want to do this earlier to firm-up the figures and make sure the transaction works financially).

- Next 2 weeks - Find your new home

- Then - Complete the Mortgage Application to get the funds approved against the property concerned.

- 3-4 weeks from now - Survey

- 5-6 weeks from now - Exchange of Contracts - entire transaction is now committed.

- 6-8 weeks from now - Legal completion, moving day. Old mortgage is redeemed and ERC is payable.

These are aggressive dates, and various factors can cause the process to go much more slowly than this. In a good market, you can leave marketing your own property a little later in the process.

exarmydreamer

Thanks for the reply, the army background is because we didn't really have much to do with the purchase of our existing place. It was done through a broker, had no chain, was empty and we signed the forms for exchange whilst away from UK. So just pointing out our lack of knowledge, nothing else. Thanks again.