First time buyer changing to joint mortgage

GeorgePowerFinch

Hi there,

My girlfriend purchased her first flat in March this year, she was a first time buyer and got the flat for £230k with a £60k deposit.

It’s only been less than a year but we are already considering in next 12 months moving and getting a joint mortgage as my circumstances have changed so we would be able to get a decent mortgage if we both applied (we hope!)

A few questions... 1. will we need to save up a whole new deposit again? Or will the deposit she put into the first flat be used towards the new properly?

2. Is it easier getting a mortgage if we both applied? Her mortgage value was £165,000, mine would be somewhat similar, so would it be mortgage values combined + our deposit?

Any help would be greatly appreciated!

eddddy

GeorgePowerFinch wrote: »

Hi there,

My girlfriend purchased her first flat in March this year, she was a first time buyer and got the flat for £230k with a £60k deposit.

It’s only been less than a year but we are already considering in next 12 months moving and getting a joint mortgage as my circumstances have changed so we would be able to get a decent mortgage if we both applied (we hope!)

Is there an early redemption fee for your girlfriend's mortgage? i.e. She'd be paying it off after less than 2 years, so she may have a 'penalty' to pay, which could be a few thousand.

GeorgePowerFinch wrote: »

A few questions... 1. will we need to save up a whole new deposit again? Or will the deposit she put into the first flat be used towards the new properly?

Whatever money is left over from the sale of the first flat can be used as a deposit for the new flat.

For example:

• Sell the first flat for £235k
• Repay the mortgage of £170k
• Pay all the costs of buying and selling - say £10k

So you're left with £235k - £170k - £10k = £55k deposit for the new flat

(Obviously, you can add any savings you have to that.)

GeorgePowerFinch wrote: »

2. Is it easier getting a mortgage if we both applied? Her mortgage value was £165,000, mine would be somewhat similar, so would it be mortgage values combined + our deposit?

If you jointly apply with 2 salaries, you're likely to be offered a bigger mortgage than if one person applies with one salary.

(Assuming both applicants have good credit records, etc)

AdrianC

GeorgePowerFinch wrote: »

A few questions... 1. will we need to save up a whole new deposit again? Or will the deposit she put into the first flat be used towards the new properly?

I suspect you're getting confused with the multiple definitions of "deposit".

She bought a £230k flat. She put £60k of her own equity in, and borrowed (£230k-£60k) = £170k. She owns 100% of it. She will get the entire sale price, less fees, and then she repays that mortgage.

Then there's the 10% (usually) exchange-of-contracts deposit on purchase, which was only the first £23k of her £60k being paid over earlier than the rest, and forfeit if she pulled out after exchange. In a chain, the equivalent of that just gets passed up from the bottom of the chain.

It's not like a security deposit for a rental property, where somebody holds it safe against you leaving the place a mess - or even more confusing, the advance payment "deposit" on a PCP or lease car, where it's just the first part of the rental cost over the term.

kingstreet

It's only a deposit until the purchase is completed, then it is called "equity."

Her equity is the sale price of her current home less the outstanding mortgage.

On the day her property sale is completed, her solicitor repays the mortgage and holds her equity in his hand.

In the interim, you have found a new property and her equity and anything extra you want to put in from savings is once again, a deposit. The purchase price minus the deposit equals the mortgage needed.

On completion day for the purchase, the solicitor draws down the mortgage funds, adds the equity etc to it and that becomes the purchase monies.

If your partner has early repayment penalties (ERCs) on the current mortgage, many lenders allow a "port" of the rate/terms to a new mortgage, even a joint mortgage, to avoid those ERCs.

Try entering your information in her current lender's affordability calculator to see how much you can borrow. Then add to that the expected equity and any savings you want to put in to increase the "deposit" and that will give you your maximum purchase price.