Transfering Offset Mortgage to bigger house?

FlashBarry

Can anyone help me understand this process please?

Rough figures for my situation:
Current house: Worth £120k, 2 bed
Remaining mortgage: £85k
Offset savings: £20k, increasing £1k+ every month
(Mortgage is transferable, unlimited over payments allowed)

If I wanted to move and buy a bigger 4 bed house while keeping the same mortgage, how would this work?

Is it equity + offset + remaining mortgage = max value of new house?

Would I be expected to turn my offset amount into a overpayment before the move?

My position will grow stronger month on month as offset increases and remaining mortgage decreases, so I want to get an idea of how long I would need to wait.

Any comments or suggestions appreciated.

dimbo61

What you have right now is £55K of equity to buy next property.
If you can save £1k every month and make normal mortgage payment plus other bills you are at least proving you can afford a bigger mortgage.
You may have paid even more off the Mortgage? and therefore have more equity?
I also have an offset mortgage and Love it

amnblog

The lender has a contract with you for £85,000 on £120,000.

(assuming no extra lending or major changes in value).

You have £20K in the offset account. (you dont have to change it to an overpayment, it is your cash)

Therefore £140,000 purchase with a £85,00 mortgage should be feasible for the lender in simple terms.

FlashBarry

amnblog wrote: »

The lender has a contract with you for £85,000 on £120,000.

(assuming no extra lending or major changes in value).

You have £20K in the offset account. (you dont have to change it to an overpayment, it is your cash)

Therefore £140,000 purchase with a £85,00 mortgage should be feasible for the lender in simple terms.

To clarify, current house value + offset savings = new house value?

In the example above, if I moved to a £140k house, what would me situation be?

Mortgage of £85k
Offset savings of £0
Current house value £140k?

Sorry if these questions are a bit daft. It's been a long day!

holly_hobby

You don't port or transfer mortgage borrwings, you port the mortgage product (which happens to be an offset facility at whatever rate you have) - which will be applied to an equal amount of borrowings on your new morgage (which is assessed as a new business with full underwriting).

Your house is estimated at 120k (lets say for argument it sells at this price)

You have an outstanding mge debt of 85k - which will be wholly redeemed with your lender when your solicitor receives the funds from your purchaser (in order to give free title to the new owner).

This means you have 35k equity towards a deposit for your new larger house and mortgage & the extra 20k savings you hold (if you don't wish to keep this in a sep linked account) = 55k total deposit.

So, borrowing wise, if you were to purchase a new house for say 200k - you would have 55k deposit (as above) and require a new mortgage of 145k ... which will be subject to full underwriting.

If you effected an offset mge on your new borrowings, and retained your 20k in a linked savings pot, you'd instead need a new mortgage for 165k (ie 200k - 35k equity from your house sale) .... but due to the 20k offsett, again only charged interest on an equivilent mge balance of 145k

Does that make sense

Hope this helps

Holly x

FlashBarry

Thanks Holly

That's perfect. I understand now :beer: