selling&buying: do I have to reapply for new mortgage?

grownupgirly

Hi
love this site and really appreciate all you helpful folks out there. You feel like my virtual mum and dad! (not meant to be disrespectful or anything! I just cant go to my folks for advice in the same way!!)

So....Just wondering if anyone could give me a bit of advice. Heres my situation:

I really want to move to S. Coast. Currently own/live in a 2-bed flat in Buckinghamshire. Have been umming and ahhing about renting out my flat for 6 months, moving down to S. Coast, living with friends, whilst I find a job etc etc.

In the meantime, an acquaintance told me that she's looking for properties to buy (as a buy to let business). I showed her my place, she said she's interested as and when I decide what to do. This is good, as it would mean no EA.

So I got one valuation. (valued at 140,000). I need a few more done, I know, to get a fair idea of how much the place is worth.

Anyway, today I was down on S. Coast, saw an amazing bargain 2 bed flat selling at 112,000 and simply had to put an offer on. They accepted my offer of 108,000. Wow! Yes, I know. Bargain. It only needs new windows and a lick of paint really. New carpets eventually...

So... my question is the following: when I sell my current place and buy the new place, do I have to reapply for a new mortgage with my lender (HSBC)? Does this mean showing 3 months worth of pay slips etc? I am concerned, as I have been overseas for 4 months, (4 months without pay!), and got back at end of May. Sure, I started work again immediately (I am a teacher - am doing regular supply work) but am concerned that they might say 'no', basically.

I am confused, since I have had this mortgage with HSBC since I bought my current place in April 2004 and remortgaged with them in Jan this year (got the Jan. sale bargain 5 year fixed). My sister in law said that when you sell a place, it means the current mortgage gets paid off with the buyer's funds and then I have to get a new mortgage (same lender, same rate etc - ported over) for the new property.

could someone advise please? (with regards to getting a job, I am not that worried, as I can probably quite easily find some kind of teaching work, even supply).

Cheers!

Grownupgirly (trying my hardest to be!)

Doozergirl

If you have a five year fixed, you have to get permission from your lender to port it to the new place. They mightn't be that happy if the new place is worth less than the old and you plan to reduce the mortgage amount

You won't have to provide pay slips though.

Many people aren't tied into their mortgage on fixed rate/discounted deal so they would have to apply for a totally new mortgage with whoever was offering the best rate.

grownupgirly

thanks, Doozergirl!

Funnily enough, I had a chat with a HSBC mortgage advisor this morning, before I saw the property, asking for some 'what if' sums (eg; costs of reducing the mortgage by 10,000 or 20,000 etc). He was extremely helpful, gave me rough estimates of the cost of moving etc (he used to be an EA!) and made all the right noises, as in, it seems as though everything would be fine to port it over and that it seems they'd be ok with me reducing the mortgage amount (I may not do that though, I may just put half my profit into the flat (windows and carpets) and keep the remainder in savings or something. Not too sure yet.

Thanks again!
Grownupgirly

MarkyMarkD

Most lenders (but not all) will make you pay a pro-rata ERC (early repayment charge) on the amount you reduce your borrowing by, in these circumstances.

dwsjarcmcd

Doozergirl wrote: »

If you have a five year fixed, you have to get permission from your lender to port it to the new place. They mightn't be that happy if the new place is worth less than the old and you plan to reduce the mortgage amount

You won't have to provide pay slips though.

Many people aren't tied into their mortgage on fixed rate/discounted deal so they would have to apply for a totally new mortgage with whoever was offering the best rate.

Not sure that this is the case. When you port a mortgage it is like starting all over again with a fresh application, so that does mean a new application and proof of income etc. Not saying that this will be an issue, just what the process is.

The lender won't be bothered if your reducing your mortgage, provided their security i.e. the property, is ok but as MarkyMark says, it is likely that you will have to pay redemption charges on the difference between your current mortgage and your new one. So if your current mortgage is £100k and your new one is, say £80k and they apply an Early repayment charge of 4%, then you would need to repay 4% of £20k = £800. In reality this is probably going to be worth it because 5 year fixed rates were cheaper in January than they are now.

David