New Mortgage - Pay off existing Mortgage - What exactly happens?

incesticde

Hi folks,

I currently have a 10 year fix with Nationwide which has about 7 years left, I've been overpaying by £500 per month for over two years so the balance is now £50K @ 3.14%.

We are now looking to move to a better house in a great area so will need to borrow more (circa £180), as the nationwide mortgage can't be extended I'm looking to pay it off and take the hit ERC wise (7%) with part of the new mortgage.

When do I have to pay off the old mortgage? Does it have to be when the new mortgage starts? If I could pay it off two months down the line then that would be the anniversary of my old mortgage agreement and thus I could whack 10% of the original mortgage as an overpayment and then close the mortgage thus saving myself £700+.

s this possible?

Many thanks for your help

aries_163

So your mortgage is paid off on completion of the sale of your house.

AnotherJoe

incesticde wrote: »

Hi folks,

I currently have a 10 year fix with Nationwide which has about 7 years left, I've been overpaying by £500 per month for over two years so the balance is now £50K @ 3.14%.

We are now looking to move to a better house in a great area so will need to borrow more (circa £180), as the nationwide mortgage can't be extended I'm looking to pay it off and take the hit ERC wise (7%) with part of the new mortgage.

When do I have to pay off the old mortgage? Does it have to be when the new mortgage starts? If I could pay it off two months down the line then that would be the anniversary of my old mortgage agreement and thus I could whack 10% of the original mortgage as an overpayment and then close the mortgage thus saving myself £700+.

Is this possible?

Many thanks for your help

Will Nationwide let you "port" this existing mortgage to the new property and take out an additional one to make up the difference?

Assuming you've looked at that and its a non starter, then unless you can time your completion to be after your mortgage anniversary, the answer is no because when you sell the property the mortgage must be closed and paid off, otherwise you'd end up with a mortgage on a house you dont own, which is sort of problematic

Also, is there really a £7k ERC on a £50k mortgage? Sounds very high?

Tofolo

Most nationwide mortgages are portable.
Speak to them and if you can port then do that and borrow the extra you need on a new product. You can't merge mortgages with the same bank.

It means you have 2 mortgages.
1st one is the current one with the same terms, rate and years left as your current mortgage . And most importantly no early repayment fee.

2nd for the extra balance you need. It will be on different terms including rate, length etc.

incesticde

Hi guys and thanks for the help so far

Nationwide will let me port the mortgage but doing that will leave the monthly mortgage amounts at an amount that is too high for comfort, combining the two together into one mortgage over 20 years leaves me an amount where i can comfortably overpay

The ERC is 7% (not £7K) as i'm three years into a 10 year fix.

Guess I'll just have to take the hit if the new house goes ahead before July

Thanks MSE'ers

AnotherJoe

incesticde wrote: »

Hi guys and thanks for the help so far

Nationwide will let me port the mortgage but doing that will leave the monthly mortgage amounts at an amount that is too high for comfort, combining the two together into one mortgage over 20 years leaves me an amount where i can comfortably overpay

The ERC is 7% (not £7K) as i'm three years into a 10 year fix.

Guess I'll just have to take the hit if the new house goes ahead before July

Thanks MSE'ers

I was trying to work out how you got £700 savings off the ERC by paying 10% off £50k?