Remorgaging when planning to move.

Matt_S_3

Hi, I've been reading the forum for a while and found it really usefull however my mortgage expires in January and I am confused as to what to do. We got a 100% straight out of uni and have worked hard to pay off as much as possible in these first 2 years.

Mortgage was £153k, in Jan will be £143k. House worth about £165k.

Two salaries of £26500 at the moment.

Now I start to get confused, sometime next year we would like to move, and also my wife give up work(permanently) to have a baby. Looking to move up North and spend around £149k. I have a few questions;

- If we get a new mortgage for £143k, when we move and hopefully get about £20k more than this can we simply reduce the mortgage? Would this count as an overpayment and be subject to any penalties?
- If my wife gives up work will the mortgage company have anything to say about this, do we need to mention this in January or keep quiet?

Now things are going to get tight and I'm thinking of going interest only in January and then overpaying with the capital amount and then simply stopping when needed and slowly build back up. We done quite well in paying of in past 2 years so not worried about cutting repayment for a couple.

-Would a mortgage lender let us be on capital and switch to interest when needed?
-Should I consider offset and so not pay off the £20k but use it against mortgage. Head starts to hurt would this offsetting be a lot better than paying off the £20k?
-Or should I just find lowest fixed rate.

Thanks in advance for any advice.:D

lynnexxxo

You say your mortgage rate finishes in January, that means you won't have any early repayment charges, which is good. So you sell you house for 165 and end up with 22k profit (approx).

So if you want to buy a new house for 150k, you only need a mortgage for 130 (ish). Based on your salary alone, i'm sure you will be offered a mortgage for that much, but can you really afford it? Would you possibly be better looking for slightly cheaper properties?

If you get an interest only mortgage when are you going to be able to afford the capital? Especially if you wife is not planning on going back to work?

Matt_S_3

Sorry I didn't quite make it clear, we've got to remortgage in Jan, but won't be moving then, hopefully later in the year. Hence I want to make sure this mortgage is correct.

Can't really go cheaper as we want 3 bedrooms. I have got quite good prospects of salary increases.

lynnexxxo

Hi

Make sure when you remortgage that the product you get either has no early repayment charges or is fully portable.

And just beware even if the mortgage is portable, the lender might not give you a mortgage on your new property when you come to buy, for example Northern Rock is funny about giving you a new mortgage, for example if you are above a shop.