Keeping a mortgage/second mortage/help-to-buy

SDW22

Just looking for a but of advance advice/research before I head to the mortgage advisor on Monday.


My partner currently has a £120k mortgage on her property which is sold just waiting to complete. We can port this mortgage as long as it is within 6 months of the house sale. If not we have to pay £3,200 early repayment fee. (this fixed period finishes May 2015). The interest rate is currently 6.1%.


My house is sold, completed and sorted.


We have £16k in savings.


We are looking at a property for £250k.


We are looking to increase her mortgage/take out second mortgage and add me on for a 12 month fixed period (told this wouldn't be an issue on the phone) to cover the extra to purchase the property. Then following the end of the initial mortgage fee period and the second mortgage fixed period we could go for a 'normal' single remortgage at a better rate for the whole amount.
We also had help-to-buy suggested to us as a way to reduce current monthly outgoings to save some extra cash for 12 months so our single mortgage in 12 months could be less. I can not find any info online as to whether we could do this or not.


tbh I am not sure I trust these schemes but if its only for 12 months... ... ???


Any idea if the above is possible, any other ideas etc etc

kingstreet

The ERC will be payable and then refunded if the rate is applied to a new mortgage which completes within six months of the repayment of the old one.

Add me on for a twelve month fixed period? Really?

Help To Buy? Equity Loan? Are you buying a newbuild?

Second mortgage?

SDW22

Maybe didn't explain that the very well.


My name would be added on to the existing mortgage and once the fee period is over we could then remortgage the full amount. I know we would have an admin fee. If the existing mortgage is effectively paid off we could take a single joint mortgage with them and have the ERC refunded?


It is not a new build but the website says help-to-buy is available on second hand homes.


I know it is possible to have more than one mortgage to purchase a single property.

kingstreet

A lot of confusion about how things work.

First, Help To Buy - Equity Loan is available on newbuilds only. Help To Buy - Mortgage Guarantee on second hand homes simply increases the amount of 95% lending in the market by the Government providing guarantees to the lender.

The existing mortgage is repaid when the property is sold. The ERC is paid at that time.

If a new mortgage is arranged with the same lender and completed withing six months of the old one being repaid, the ERC is refunded. This can be a sole or joint mortgage.

Porting refers to the rate from the old mortgage being transferred to the new mortgage when it starts. It doesn't mean the actual mortgage is transferred, as that is not possible.

A mortgage is the legal deed which ties a loan to a property, the security if you like. Lenders allow different rates within the same mortgage/loan by operating several "sub-accounts" these are not different mortgages. There is still only one mortgage on the property, one first charge legal security.

dimbo61

You have £16K in savings! How much profit are you going to make from the sale of your partners property?
The profit minus the ERC of £3,200 is the amount of money you have to put down on a new property.
£250K would mean 1% stamp duty so £2500 but if you go over £250K you will pay 3% stamp duty.

SDW22

Thanks Kingstreet. It gave me heads up when speaking to the advisor.


I hadn't realised that the help to buy available on new build homes was completely different to the help to buy on second hand homes. Not really much help to us.


We have been offered an existing customer rate plus the refunded ERC on a 'normal' mortgage so all is well!!


Thanks again