Moving Home and Remortgaging

alan_01

I wonder if anyone can help.

Currently had a bid accepted on a new property. I am getting it a good price with the only catch that the sale must be completed within 4 weeks.

I won't be able to sell my current property in that time so my parents have helped me and emptied their savings to help me buy the new property outright.

My current property that is up for sale has a mortgage on it. To pay back my parents I am looking to transfer the mortgage over to the new property, however as I already own the new property outright would that be possible?

mrginge

You can't transfer a mortgage from one property to another.
You redeem the existing one and apply for a new one.

In a normal joined sell & buy scenario if your mortgage allows porting then you can transfer the rate across.
However, you are looking to remortgage an unencumbered property so it is unlikely your lender will entertain any rate porting.

Are you sure you'll be able to get a mortgage on this second house?

kingstreet

I agree. You can, in most cases, port the rate from an old mortgage to a new one when you sell and buy at the same time.

You would want to remortgage an unencumbered property and many lenders will not sanction this until you have owned the new property for at least six months.

Your port would not be a viable proposition, IMHO.

Did you get any advice before you embarked on this plan?

alan_01

No naively I just thought that as I had a mortgage then it would be easy enough to transfer over to the new property.

The mortgage does allow transferring, but as you guy's say that is for standard sell & buy scenario.

Any ideas of how I can get round this?

kingstreet

You can transfer a rate from an old mortgage to a new one on a new property, that's porting.

However, the old mortgage is actually repaid on the sale of the old property and a new mortgage starts when you purchase a new one. Its amazing the number of people who work for lenders do not know that, or choose not to explain it as it happens. A mortgage is the deed which ties a loan to a property. They are not transferable.

There is no way to get round this. You need to talk to your existing lender about what options it offers and which ones remain open to you based on your progress with the transaction.

alan_01

I had contacted the mortgage provider and they said they would be able to port the mortgage over e.g. keep the existing terms.
However it would be treated as a new mortgage application.

However I never explained the part to them that I would already own the new property outright.

So I am guessing with what you are saying that's where the problem is?

kingstreet

Oh yeah.

I had contacted the mortgage provider and they said they would be able to port the mortgage over e.g. keep the existing terms. However it would be treated as a new mortgage application.

Is exactly right.

However I never explained the part to them that I would already own the new property outright.

So I am guessing with what you are saying that's where the problem is?

Is where you got the wrong answer. Or the right answer for the wrong circumstances.

Thrugelmir

Sell your existing property to your parents.

mrginge

Thrugelmir wrote: »

Sell your existing property to your parents.

Assuming the parents can raise the finance to buy it, aren't they then just trading a family debt for an illiquid asset that attracts CGT?