Moving house in the middle of fixed rate mortgage???

mandgreen

Hi all,

I'm a bit of a novice when it comes to Mortgages so hopefully someone can help me.

Currently in a 2 year fixed rate with Halifax until April 2019. My husband has had a promotion at work so we are looking to move to a bigger house / better area. So I am wondering how it works moving house when you are in the middle of a fixed rate?

Halifax claim that the mortgages are "portable" and can be taken with you when you move... but how does that work in reality, especially if the house I am moving to requires a bigger mortgage than the house that I am selling and moving from?

Thanks in advance for any help.

glentoran99

You end up with effectively two mortgage accounts, (sub accounts), 1 with the original rate, and the extra on possibly on a different rate

amnblog

The 'mortgage' is not portable, but the product is (subject to be being successfully underwritten for the new mortgage on the new house).

This means you take the product with you rather than paying an early redemption penalty by breaking the contract on it. Any extra funds are taken out as a new tranche of lending on a product as available today.

mandgreen

Thanks for your replies. So i basically take out an additional mortgage to cover the additional funds? The thing is the only deposit I have is the equity in my current property. How will this effect me if I have to take out another mortgage as I won't have any deposit to put down, won't this mean I'll get automatic refusal / be given a rubbish rate?

Also if for instance I take out another fixed 2 year mortgage it means both rates will end in different years, is there a way they can merge them so I only have 1 ending date?

amnblog

mandgreen wrote: »

Thanks for your replies. So i basically take out an additional mortgage to cover the additional funds? The thing is the only deposit I have is the equity in my current property. How will this effect me if I have to take out another mortgage as I won't have any deposit to put down, won't this mean I'll get automatic refusal / be given a rubbish rate?

The additional lending will be taken against the new property, not the old one.

mandgreen wrote: »

Also if for instance I take out another fixed 2 year mortgage it means both rates will end in different years, is there a way they can merge them so I only have 1 ending date?

Yes, if you allow one to run on a standard variable rate until it is in line with the other.

alex_163163

There might be another option than being on the SVR on the 2nd mortgage subaccount - when I ported last year, and took out additional borrowing, my additional subaccount was placed on a tracker mortgage - 1.49% above base rate (no ERC fees).
We stayed on that for 6 months until the fixed period of the 1st subaccount came to an end. We then transferred both subaccounts to the same fixed 3 year product to get them both into alignment.

OP - in terms of your deposit - are you not planning on selling your current property, and as such using the equity for the deposit on the new house?

s_glover

Thank OP and all replies.


We're looking to do the same sometime soon


Probably looking at the new house being over twice as much as out current one! We have overpaid quite a bit on the current mortgage so have a bit of equity and we have additional savings towards a deposit. Fingers crossed we are able to port as we have over 2 years remaining on the current fix.

mandgreen

Thanks, so basically I will have to take out a SVR or tracker mortgage for the additional amount until July 2019 and pay a higher interest rate then switch to another fixed rate mortgage at a lower rate combining the old and new mortgage amounts?

Yes I will be using the equity from my current house as the deposit but I didnt know if I would need the funds sooner than completion to use as a deposit against the additional mortgage?

If it helps my house is up for sale for £175000 and my remaining mortgage is £101500 and I currently pay 1.87% interest on a 2 yr fixed rate. The new house we are looking to buy is £280000.

My early repayment charge is 3% of the amount repaid on or before 31/07/18 or 2% of the amount repaid on or before 31/07/19. The maximum repayment charge is £3100.14.

Can anyone tell me in simple terms what the redemption fee would be based on this? And if it would be worth just paying it and taking a new mortgage out or porting it?

s_glover

If you were to repay today it would be 3% of your outstanding balance which is £3045.


It depends on what rate you could get for your additional mortgage versus what deal you could get for a mortgage for the total.

kirtondm

The other option is to do just pay the redemtion fee and take a whole new mortgage. I did that last year as I did not want a fix rate ending in 2019 .

By the time you have sold the house etc another 6 monthes will probably have gone by