Mortgage advice :)

caatah

Hello, i'm just looking for general advice about mortgages.

I took out a mortgage with Barclays last September of £78,000 on a flat that is valued at £125,000. It was a fixed rate for 5 years if I remember right.

Now, since i took the mortgage out, my circumstances have changed big time. My girlfriend at the time, now fiancee has moved in with me, and we are now expecting our first baby, which in turn means we need a bigger place.

The properties we have been looking at are around £240,000, and i'm wondering if it is possible to move my current mortgage to another property, and then borrow more in my and/or my partners name. We would have around £40,000 for a deposit providing we get what we are expecting from our sale. Hoping that 240,000 - the 78,000 - around 40,000 from the sale leaves a gap of 122,000 to find, which my partner could take out? I imagine its not that simple though

If its not possible, then (on average) how bad are the fees for paying off early and then taking out a new mortgage in both our names?

And is there a third option i'm not seeing. Basically, i'm tied in, and want to move to a bigger house, with my partner now on the plan. I'm happy to provide more details if it helps.

Thanks,
Allan

amnblog

Check your maths again Allan.


Or are you saying you have £40,000 cash for a deposit in addition to the equity in your flat?


Technically you can move your current mortgage product to the new property.

caatah

The £40,000 is the equity i'm hoping for. The flat i'm in is roughly valued at 125k, and i'd be dissapointed if i got less than 120k. So firstly, I need to find out if I can move the current mortgage to the new property plus the equity I have at least 120k towards the new flat then that would be a good starting point for me to work out my options. THEN I can look at how to raise the other 120k...

Landofwood

No point in us telling you the "average" fees for exiting your mortgage early.

Have a look at your paperwork and you'll see exactly what they are.

libf

caatah wrote: »

The £40,000 is the equity i'm hoping for. The flat i'm in is roughly valued at 125k, and i'd be dissapointed if i got less than 120k. So firstly, I need to find out if I can move the current mortgage to the new property plus the equity I have at least 120k towards the new flat then that would be a good starting point for me to work out my options. THEN I can look at how to raise the other 120k...

Porting your mortgage doesn't actual mean moving it over to the new property. The only thing that ports is the rate on the portion of money that you've already borrowed and they waive the ERC, but you are assessed as a new customer.

Is your current rate worth porting? ERC will need to be looked up from your mortgage paperwork. (For some idea... Nationwide is typically 5% of outstanding balance in first year, 4% in second year, etc on a 5 year fix.)

caatah

I'm at work and don't have access to my paperwork but it is a fixed rated for 5 years, and pretty sure it was 4.5%, which I don't think I would get much better than that

The thing that concerns me is having to pay the ERC for making the change to the new property. If I can get the money i've already borrowed moved over, and re-negotiate a new deal, ideally with my partners earnings taken into account as well then I think we could just about stretch to make the move.

If theres loads of fees involved in the process then I don't afford to go through with it. If it was like 6% of the remaining balance then that will likely be and extra 4k which just makes it that much more difficult.

I thank you all for your help, and guess i've maybe came to this forum without all the information needed. I'll dig out my paperwork and contact Barclays direct and see what they're saying. I feel better knowing that it might be possible to "port" the mortgage and waive the ERC.

Thanks,
Allan

Caz3121

Looking at the calculations you would be looking for a mortgage of £200k for a property of £240k...£40k equity from your current property, £78k that you are hoping to port at the current rate to avoid ERC and £122k at new borrowing rate
You will need to meet the criteria and affordability for the full £200k ...

caatah

This has been a great help, before when I was researching i was using words like transfer.. but read up on porting your mortgage and think i have a better understanding.. and by the sounds of it, so long as my mortgage is portable then should manage to move it.

My next challenge is raising some more capital OR setting a more realistic budget. Using a quick online calculator, I fear the most we can borrow on an income based mortgage is around 150,000, which with the 40k equity still only leaves us on £190,000.

We will likely have to consider just reducing our target for just now to £190,000. Which in fairness would probably allow us to get a similar sized property, just outwith the city.

getmore4less

caatah wrote: »

The £40,000 is the equity i'm hoping for. The flat i'm in is roughly valued at 125k, and i'd be dissapointed if i got less than 120k. So firstly, I need to find out if I can move the current mortgage to the new property plus the equity I have at least 120k towards the new flat then that would be a good starting point for me to work out my options. THEN I can look at how to raise the other 120k...

do it the simple way.

£120-£78 = £42 knock of another £5k for fees leaves £37

£240-£37 looking to borrow £203k LTV 85%

Whats the income situation?

amnblog

I suspect you need to consider affordable housing schemes Allan - such as Help to Buy Equity Loan or Shared Ownership.


This should improve the type of property you can purchase with the capital and income you have.


It may also mean you cannot port your mortgage product and will have to pay an early redemption penalty.

caatah

I am on 25,000 per annum and my partner is on 18,000. The calculator i used suggested a maximum of £150,000 but will all depend on Barclays I reckon. I'd struggle to hit the target of £240 this way, which is why i'm resigining myself to aim for around 180/190k. Although still a step up from where I am now.

I've never heard of these housing schemes, but will read up on them when I get home tonight. Might be worth looking into.

Thanks again for all your help everyone!