Moving in under 'Licence'?-Mortgage advice please.

mikul182

Hi,
This is a new one on me so bare with me...
I have agreed a sale of my property. Had an offer accepted on a property I intend on moving to. The buyer of my property is ready to go. I am ready to go. There is no forward chain in regards to the property I am purchasing. The conveyancing side of things is in full swing. I am porting my current mortgage to my new property. Everything was going swimmingly until today. I received a phone call from the estate agents informing me that the current occupier of the property I have agreed to purchase has a fixed rate mortgage until June 1st and would have to pay a substantial fee to end this early. They are not willing to pay this early penalty charge. The estate agent did inform me of what seems to be the only possible way around this and that being that I complete on the sale of my property and then move into the new property on ‘licence’ until June 1st when I complete the sale. Has anyone got any experience in this? What would happen to my mortgage? How does this work?

Any advice/guidance/help is greatly appreciated.

eddddy

Essentially, the suggestion is that you sell your current house and move into the new house now/soon, but you don't actually buy/own the new house until 1st June.

You can check with your lender how long the gap between selling and buying can be for porting your mortgage (some say 3 months max).

The biggest problem will be that the seller's mortgage lender may not allow this.

mikul182

eddddy wrote: »

Essentially, the suggestion is that you sell your current house and move into the new house now/soon, but you don't actually buy/own the new house until 1st June..

Essentially that would be good but what would happen with regards to our current mortgage and the mortgage we have agreed for the property we're purchasing? Surely we can't start paying that mortgage when the current occupier pays theirs for that property also.

davidmcn

mikul182 wrote: »

Essentially that would be good but what would happen with regards to our current mortgage and the mortgage we have agreed for the property we're purchasing? Surely we can't start paying that mortgage when the current occupier pays theirs for that property also.

You pay off your existing mortgage on the date you complete your sale, you start your new mortgage on the date you complete your purchase - so you'd have a gap in between with no mortgage.


But as noted above, it's likely that the proposal won't happen once the solicitors point out the potential problems (which are mostly risks for the sellers).

saajan_12

mikul182 wrote: »

Hi,
This is a new one on me so bare with me...
I have agreed a sale of my property. Had an offer accepted on a property I intend on moving to. The buyer of my property is ready to go. I am ready to go. There is no forward chain in regards to the property I am purchasing. The conveyancing side of things is in full swing. I am porting my current mortgage to my new property. Everything was going swimmingly until today. I received a phone call from the estate agents informing me that the current occupier of the property I have agreed to purchase has a fixed rate mortgage until June 1st and would have to pay a substantial fee to end this early. They are not willing to pay this early penalty charge. The estate agent did inform me of what seems to be the only possible way around this and that being that I complete on the sale of my property and then move into the new property on ‘licence’ until June 1st when I complete the sale. Has anyone got any experience in this? What would happen to my mortgage? How does this work?

Any advice/guidance/help is greatly appreciated.

Essentially they are suggesting you sell your property, pay off your mortgage, and rent their property (for £0) until 1 June when you actually purchase their property. Consequences / things to think about:

1. PORT MORTGAGE?: Were you planning on porting your mortgage to the new property? Some lenders will let you have a gap ~3 months to remain on the same deal, which you'll need if you have Early Repayment Charges (ERCs) for your mortgage too. Check yours.

2. NEW MORTGAGE? You could pay off your mortgage when you sell and apply for a new mortgage for the new property. This will incur new valuation fees if you've already had the survey once already.

3. EXCHANGE: Make sure you exchange on both the purchase and sale at the same time, before you move in to the new property. Otherwise you could move and then everything fall through, meaning you have to move again. Or the vendor could raise the price knowing you're unlikely to look elsewhere once you've moved in.

davidmcn

saajan_12 wrote: »

Or the vendor could raise the price knowing you're unlikely to look elsewhere once you've moved in.

Or the OP could lower their price, knowing that it's a lengthy process for the vendor to evict them once they've moved in.

saajan_12

saajan_12 wrote: »

Or the vendor could raise the price knowing you're unlikely to look elsewhere once you've moved in.

davidmcn wrote: »

Or the OP could lower their price, knowing that it's a lengthy process for the vendor to evict them once they've moved in.

Indeed, depends who is more keen.

Tom99

A relative of mine did this, they signed an AST for the flat they moved into and the purchase was completed about six months later. Only problem was the mortgage offer had to be extended a couple of times.

mikul182

Tom99 wrote: »

A relative of mine did this, they signed an AST for the flat they moved into and the purchase was completed about six months later. Only problem was the mortgage offer had to be extended a couple of times.

AST? Everything went ahead ok? No hitches?

Tom99

mikul182 wrote: »

AST? Everything went ahead ok? No hitches?

[FONT=Verdana, sans-serif]There were no hitches, it was my relative who produced the AST and the flat seller was happy to go that route and receive some rent for six months.

[/FONT] [FONT=Verdana, sans-serif]On completion of the sale the AST was just forgotten about.

[/FONT] [FONT=Verdana, sans-serif]I would add that neither solicitor was informed in case they put up some sort of objection.

[/FONT] [FONT=Verdana, sans-serif]I am not putting this to you with any sort of recommendation but only to give you an example of what someone else has, rightly or wrongly, done.[/FONT]

nomoneytoday

Can you exchange now with a move date of June?