Transferring a mortgage to another property (self emp)

jar85

Hi All;

Thanks for all your input in this forum.

Here is a brief background. We are a married couple. My wife is self-employed and I am an ex-director. I currently manage the business which is in her name.

She has just left her job, in order to study book-keeping. She used to be employed full time.

We are in our early 30's and have had a mortgage for 8 years.

The mortgage was issued with her father on the mortgage with her. I am not on the mortgage.

We want to move out of our 1-bed flat into a bunglalow. We have savings aside and could put down about 10-15k.

The question: If the bunglalow (for renovation) doesn't require us borrowing more, can we simply transfer the mortgage, without having to re-apply etc?
We're concerned the mortgage co. wouldn't look favourably on us as self-employed now.
Furthermore we'd just like to avoid further borrowing.

Many thanks in advance!

kingstreet

No. It is not possible to transfer a mortgage from one property to another.

When the current property is sold, the mortgage will be repaid. You will apply for a new mortgage on the new property.

If you apply to the current lender and are successful, you may be able to "port" the rate from the old mortgage to the new one.

jar85

It isn't possible to apply for a change, and have them assess the new property to ensure it's ok as security?

We would have to make a completely new mortgage application?

Thrugelmir

jar85 wrote: »

We would have to make a completely new mortgage application?

Yes as that's what is is. Legal and regulatory requirements also constantly change. These have to be complied with.

kingstreet

Most people think a mortgage is a loan to buy a property.

It is, in fact, the legal document which ties a loan to a property (legal charge), so for the mortgage to end it has to be redeemed and the legal charge discharged by the solicitor.

Therefore, a new "mortgage" has to be taken to secure a new loan to a different property.

jar85

Thanks for the replies so far.

I know this is a tricky thing to assess, but the mortgage is owing about £75k. We'd be putting down 10-15K. It would be based on self-employed income, and we have an accountant compiling up-to-date books constantly.
Given circumstances have changed, might we still be successful in obtaining a new mortgage?

kingstreet

If the affordability based on your chosen lender's calculator, based on your personal outgoings and latest two years' averaged net profit (if that's what your chosen lender uses) over the term you have selected says it's affordable, then, yes.

jar85

Many thanks!

Is 2 years generally required, or if we had a mixture of 'fixed (employment) and self-employed income + a guarantor- this might make the 2 years more flexible?

kingstreet

No. There are one or two lenders who will accept a single year's trading, but the bulk of the lending market is based on the average of two years.

Old style guarantor stuff is pretty much a thing of the past, unless you have someone who can guarantee the whole mortgage for the whole term.

That means no-one over 45 for a 25 year term and anyone with a mortgage, credit commitments and only a short time until retirement.

Speak to an independent broker.

jar85

Hmm, that's a bit of a bummer really! I'm not aware of all the in's-and-out's of the setup of the mortgage, but my father-in-law is 'on it' and I assume he was a guarantor therefore. Unless he is just a joint applicant?

He's over 45 now, but he did have other mortgages before. He has a few houses he rents out.

Perhaps he was jointly on the mortgage. He has offered to 'stay on' the mortgage so we might be more successful when re-applying if we do it this way? He is certainly viewed as a safe 'lendee' by all accounts.

I'm unfortunately having to keep away, due to my Ltd Co. failure and personal liabilities therein...