Avoiding ERC, even if profit made from selling flat sitting in the bank?

Hi there

I'm still on my introductory fixed rate with my mortgage provider but I want to sell so that I can buy a house with my partner. I'm kicking myself a bit that I didn't choose a shorter introductory fixed rate but it is what it is!
I have about 60,000 left on my mortgage so a sale of my flat would mean I could pay it off. But-am I obliged to pay the amount off if the sale of the flat would leave me in a position to do so?
I ask this because there is a chance that me and my partner could buy a property outright with the amount he has saved and the money from the sale of my flat, and therefore we wouldn't need the mortgage I have and an early repayment charge on 60,000 would be just about manageable. Or we could get a slightly bigger house to make use of the fixed rate mortgage period and avoid an early repayment charge?
I hope his all makes sense..Thank you!

Replies

  • Edi81Edi81 Forumite
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    How long have you got? What is the ERC %?

    Your paperwork from the mortgage company will confirm if you can port the rate to another property.
  • silvercarsilvercar Forumite, Ambassador
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    You could port the mortgage over (if allowed) and delay repayment until the end of your tie-in. You need to do the maths on whether the costs (application fee, survey, legals) would be higher or lower than the redemption fees. You don't have to get the bigger house.
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, in my home and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to [email protected] (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • ACGACG Forumite
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    You will be obliged to pay it on completion of the sale.
    The solicitors will ask for a redemption figure which will include the balance on the expected completion date, the ERCs and the deeds release fee (usually around £100).

    You could port your mortgage over to the new property until the deal finishes and avoid the ERC. You would probably need to add your partner to the mortgage.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • librarian83librarian83 Forumite
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    Thank you for your help! Next year (when we are looking to buy) I will still have 4 years left on my fixed rate, so it'll be 4% of just under £60,000. The paperwork says I am able to port the mortgage to another property.
    Perhaps 4% of £60,000 ERC would be less than the interest accrued (fixed rate is 2.19?)

    Thank you for your patience :)
  • ACGACG Forumite
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    You may also find the percentage rate drops year on year. So it will maybe be 3% and on a smaller balance.
    I am a Mortgage Adviser
    You should note that this site doesn't check my status as a mortgage adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice.
  • silvercarsilvercar Forumite, Ambassador
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    Thank you for your help! Next year (when we are looking to buy) I will still have 4 years left on my fixed rate, so it'll be 4% of just under £60,000. The paperwork says I am able to port the mortgage to another property.
    Perhaps 4% of £60,000 ERC would be less than the interest accrued (fixed rate is 2.19?)

    Thank you for your patience :)

    £2,400 is the ERC.

    4 years of interest is £5,256. Plus the application fee, valuation fee, legals....
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, in my home and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to [email protected] (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
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