Mortgage Advice - change in circumstances

mortgageadvicedaa

Hi all. I am hoping someone can help me as I am not too familiar with all of this.

In the coming months I am coming towards the end of a 2 year fixed mortgage. This is a mortgage that I have alone on a good interest rate. However, my circumstances have since changed and I have found a partner and we are discussing moving in (firstly to my property) but then selling our own properties and buying a property together in the not too distant future (less than a year hopefully). There are 2 pieces of advice I need:

1) When my fix term ends I want to be flexible and not tied in to a mortgage at my current provider. I need the flexibility to be able to sell my property/cancel my mortgage with current provider when the time is right for me and my partner without being hit with significant charges (X% in year 1, X% in year 2 etc - all fixed mortgages seem to have this clause?). When the fixed term ends they will put me on the SVR which is great for flexibility but due to the higher interest rate, my payments will increase significantly and can't afford this without impacting the rest of my life. However, I have found some 2-year tracker deals with my current provider which are cheaper than the SVR and seem to offer a 'no early repayment charge'. Does this mean whilst the tracker mortgage is for 2 years, I could sell my property/cancel my mortgage with them earlier without any charges (perhaps just an admin fee)? Am i not tied in? This is the flexibility I require - I do not want to be tied in when I don't know what the coming months hold - selling up and buying with my partner and consequently having a new mortgage, probably with a new provider.

2) When we buy together, the money for the deposit will come solely from my property (approx £60K). Transaction wise, can I sell my property (and effectively cancel my current mortgage) and then pay the deposit and start the new mortgage in a joint name on the same day. Is this how this works? The only way we can afford the deposit is through sale of my property - we have no other disposable cash. And we require this sale and purchase and all money transfer to happen in the same day as we have nowhere else to live so cannot afford to be homeless. Ie. in the same day i need to seemslessly move from the current property in my name to a new property in a joint name and all financial transactions be sorted without any additional cash being provided! I assume this is common practice and solicitors are used to this? I've just never been in this situation. Previously i was a first time buyer with cash deposit and no chain! Obviously because I am paying the deposit, we would have something written in the 'deed of trust' to reflect this. Presumably the solicitor would deal with this. Is it best practice to state the value of the deposit to be returned or for the deed to reflect unequal shares in the property?

Thank you in advance. This seems rather complicated and stressful but I am sure this is a situation a lot of people have been in and the questions are probably very basic - it's just I've never been in this situation before.

enthusiasticsaver

Some lenders agree to port products over to a new property if you move so you don't necessarily have to go on SVR while you are waiting to complete the move. Tell your current lender you intend moving shortly but you need to emphasise that the new mortgage will be in joint names. That might put a spanner in the works. Alternatively just go for a one year deal or wait out the two years. You need to calculate the penalty of repaying the mortgage within the deal period against the increased payments under SVR. Then make a decision once you have all the facts.

When you sell your property your mortgage will be repaid and any equity transferred to your new property unless you are getting some back. This will be reflected in your solicitors completion statement. Completion on both the old and new property would normally be the same day. Often solicitors will waive the 10% deposit on exchange if all your deposit is coming from the sale of your old property or they use the deposit your buyers give you. That is completely normal for most of us not to have a gap between sale and purchase as most people are depending on equity from their sale to complete the purchase. Your solicitor can draw up a deed of trust re the unequal deposit.

kingstreet

mortgageadvicedaa wrote: »

1) When my fix term ends I want to be flexible and not tied in to a mortgage at my current provider. I need the flexibility to be able to sell my property/cancel my mortgage with current provider when the time is right for me and my partner without being hit with significant charges (X% in year 1, X% in year 2 etc - all fixed mortgages seem to have this clause?). When the fixed term ends they will put me on the SVR which is great for flexibility but due to the higher interest rate, my payments will increase significantly and can't afford this without impacting the rest of my life. However, I have found some 2-year tracker deals with my current provider which are cheaper than the SVR and seem to offer a 'no early repayment charge'. Does this mean whilst the tracker mortgage is for 2 years, I could sell my property/cancel my mortgage with them earlier without any charges (perhaps just an admin fee)? Am i not tied in? This is the flexibility I require - I do not want to be tied in when I don't know what the coming months hold - selling up and buying with my partner and consequently having a new mortgage, probably with a new provider.

Yes. This is a great alternative to SVR.

I would not take a product with ERCs and expect to be able to port. What if the property for example doesn't meet the lender's requirements?

2) When we buy together, the money for the deposit will come solely from my property (approx £60K). Transaction wise, can I sell my property (and effectively cancel my current mortgage) and then pay the deposit and start the new mortgage in a joint name on the same day. Is this how this works? The only way we can afford the deposit is through sale of my property - we have no other disposable cash. And we require this sale and purchase and all money transfer to happen in the same day as we have nowhere else to live so cannot afford to be homeless. Ie. in the same day i need to seemslessly move from the current property in my name to a new property in a joint name and all financial transactions be sorted without any additional cash being provided! I assume this is common practice and solicitors are used to this? I've just never been in this situation. Previously i was a first time buyer with cash deposit and no chain! Obviously because I am paying the deposit, we would have something written in the 'deed of trust' to reflect this. Presumably the solicitor would deal with this. Is it best practice to state the value of the deposit to be returned or for the deed to reflect unequal shares in the property?

Yes. Deposit situation all fine. Your buyer's deposit passes up the chain.

Tenants in common, unequal shares, deed of trust all useful in scenario set out.

mortgageadvicedaa

Thank you for this. It's great to know that there will be no issue with the transaction itself and I will not be expected to contribute additional cash other than the equity of the property.

Still some confusion of point 1. We don't want to 'port' since we will probably go with a new provider in joint names. The mortgage will be for a different amount too. Also, i don't want to fix for a fixed term in my current property because we need to act when is right for us and we don't want to be restricted because I am tied into a mortgage deal on my current property. I need something flexible. As I mentioned, I found a 2 year tracker deal with 'no early repayment charges' with my current provider. It states (You'll pay no Early Repayment Charges (ERC), allowing unlimited overpayments and penalty free switching). That presumably means I can sell my property and leave that mortgage deal without any charges without the 2 year period being up? That's what 'no early repayment charges' mean? Surely the SVR cannot be the only mortgage deal I can be on to provide the flexibility I need when the fixed term ends? Will other providers do similar flexible mortgages?

Thank you again.

mortgageadvicedaa

kingstreet wrote: »

Yes. This is a great alternative to SVR.

I would not take a product with ERCs and expect to be able to port. What if the property for example doesn't meet the lender's requirements?

Thanks but I wouldn't want to port. I would want to cancel my current mortgage agreement through sale of my house and then start a brand new product, probably at a new provider in joint names with my partner. We would want one mortgage - not a ported one for one value and another mortgage at another value for the additional cost of the new property. Is this still easy to do and straight forward if i have no ERC?

enthusiasticsaver

If there are no ERC then yes. Make sure you read the small print though and you are not tied in re having to take new product with same lender.

chunkytfg

mortgageadvicedaa wrote: »

Thanks but I wouldn't want to port. I would want to cancel my current mortgage agreement through sale of my house and then start a brand new product, probably at a new provider in joint names with my partner. We would want one mortgage - not a ported one for one value and another mortgage at another value for the additional cost of the new property. Is this still easy to do and straight forward if i have no ERC?

Then a mortgage with no ERC is just what you're looking for:beer:

kingstreet

You have one mortgage, port or no port. Porting results in two or more sub-accounts which reflect the different borrowing amounts/times.

enthusiastic saver was advocating for a possible new product and port later. I was suggesting you had come up with a superior alternative in the ERC-free tracker as a port isn't guaranteed.

JimmyTheWig

mortgageadvicedaa wrote: »

I have found some 2-year tracker deals with my current provider which are cheaper than the SVR and seem to offer a 'no early repayment charge'. Does this mean whilst the tracker mortgage is for 2 years, I could sell my property/cancel my mortgage with them earlier without any charges (perhaps just an admin fee)?

Yes, that's exactly what it means. The only thing to be aware of is the product fee for taking this tracker. You need to be happy that the fee is worth the reduced interest rate for the time that you realistically expect to be there.

2) When we buy together, the money for the deposit will come solely from my property (approx £60K). Transaction wise, can I sell my property (and effectively cancel my current mortgage) and then pay the deposit and start the new mortgage in a joint name on the same day. Is this how this works?

Again, yes, that's exactly how it works. It's the situation that most people are in when they move house. It means that you will be part of a chain, which can be annoying, but it's how it works.

JimmyTheWig

chunkytfg wrote: »

Then a mortgage with no ERC is just what you're looking for:beer:

No (or low) ERCs and low (or no) product fees.

mortgageadvicedaa

Perfect - everyone has been extremely helpful. Anyone any examples of the no ERC no fee products?

Thanks!