Re-Mortgaging Flat Before Going Travelling

Leon12

Hi All,

I am close to deciding to take an 18 month travelling trip starting in July 2023 and returning at the end of December 2024. I own and pay a mortgage on my own flat and am currently on a 5 year fixed deal with NatWest which will end in December 2023. I initially took out this mortgage with Metro Bank 9n 2018 but they sold it to NatWest last year so I am now with NatWest. I have worked out the funding for how I will fund both the trip and paying the mortgage and bills whilst I am away and in short and without going into personal details, this will be a combination of my own savings and a £75k gift from my parents which will come out of my inheritance when they pass away - I have already worked out the numbers for how this affects the rest of my life etc in terms of using a large part of my inheritance on this as opposed to something else and again without going into details, the numbers work fine. So I have some general questions on this plan please which are:

1.       My fixed term mortgage runs out in December 2013 so 4-5 months after I leave and I would like to get it all renewed before heading off as I do not want the stress and hassle of trying to do it whilst travelling and also if I do it whilst travelling, my salary at that point would be £0 as I would have left my job. I am happy to stay with NatWest and whilst I know from a previous thread I posted that staying with the same lender can make this easy as it can just be a case of logging in, choosing a new deal and moving to that new deal with no questions asked about salary etc, this is complicated for me because when Metro sold my mortgage to NatWest, I am unable to log in online to the NatWest mortgage portal as it cannot accept my Metro Bank account number. When I asked NatWest about this they said the only way I can login is to take out a new mortgage with them and so because of this, I will have to actually speak to someone (who will probably ask questions about salary) as opposed to being able to do it online. So what I would like to do is get my deal renewed before I head off for the reasons given above. My mortgage has an early repayment charge which is currently 2% of the amount repaid and that will drop to 1% in early December. So my plan is to renew it in December once it has dropped to 1% and at that point that charge should be something like £1100 which I can cover. So my question here is, could that be an issue if they start asking (in December) why I am renewing and incurring the charge where as if I just wait for a further year I can avoid that charge and renew for free which I can do when the mortgage enters its final 3 months? Obviously I won't tell them that I plan to go travelling 4-5 months after renewing. As I say I would normally do the renewal online but the mortgage sale means I cannot do that as I cannot access the NatWest online portal. To be honest it is a major inconvenience anyway not being able to log in as I have to keep phoning their customer service team up each time I want to check what my mortgage balance is (and this is annoying as I always watch the balance very closely so really want to be able to login to do that) and other related questions about my mortgage so I can give that as a reason why I want to change deal early. I really want to do this travelling trip as it is a lifetime experience so I really hope this isn't an issue.

2.       After I have left, is there any way NatWest could find out that I am no longer working and have gone travelling? For example I will fill out a P85 form and send it to HMRC after I have left in order to claim a tax rebate from the couple of moths I would have worked in the tax year before heading off so could HMRC inform my bank that I am no longer working? Or am I over thinking this? Is there anyone else who could somehow inform the bank that I have left to travel such as the maintenance company? To be clear again, I 100% know as I have double double checked that I have more than enough funds required to pay the mortgage payments (and bills) for the duration I am away and for a year after I get back (whilst looking for a new job which should hopefully take a lot less than that but this is a safety net) so there is no issue or risk of me missing mortgage payments - it will be paid exactly the same as if I was in full time employment.

3.       My parents will be gifting me £75k which will be taken from my inheritance - so the plan is I would receiving my inheritance minus £75k after they pass and this will be written into their will which they will re-do. My question is, does any tax need to be paid on this £75k or is it simply a case of them putting it into my bank account before I head off? I have read somewhere something about a 7 year law where if they do not pass for 7 years after giving / gifting me the money then no tax is due - is that correct? From the little research I have done, there is no tax due on cash gifts so if that is correct, presumably that counts bank transferred cash gifts and not only physical cash given by hand? Obviously they would be bank transferring the £75k and not giving it to me by hand.

To pre-answer a few things that may come up, buildings insurance is not an issue as the maintenance company organises that and I pay for it as part of the service charges and I do not want to rent the flat out whilst away due to the hassle amongst other reasons. My parents would be checking on the flat a couple of times per month and a friend who lives nearby would also check in on it regularly.

As mentioned in one of my points above, I really want to go on this trip as it is a lifetime experience and I realise that I am very fortunate to have the financial means to be able to do it so I hope none of the questions above cause a problem that could prevent that.

Thanks in advance for any help offered.

Leon

K_S

@leon12
2. Once your mortgage is in place, there is nothing in the T&Cs which says that you need to stay employed or that you need to inform the lender if there is any change in your circumstances. I don't know all of a lender's internal workings but I highly doubt they keep track of their borrower's employment situation outside of there being a live application in progress.  

simon_or

As long as your time outside the country is temporary and your base is still your flat, a broker should be able to do the product switch for you at the time without going through the whole mortgage process. It's all online and remotely done anyway, no signatures or letters required.

MWT

Leon12 said:

3.       My parents will be gifting me £75k which will be taken from my inheritance - so the plan is I would receiving my inheritance minus £75k after they pass and this will be written into their will which they will re-do. My question is, does any tax need to be paid on this £75k or is it simply a case of them putting it into my bank account before I head off? I have read somewhere something about a 7 year law where if they do not pass for 7 years after giving / gifting me the money then no tax is due - is that correct?

You are talking about a potentially exempt gift, and yes, as long as they survive the next 7 years then there would be no IHT due on the gift.

Even without that rule it is still not 100% certain that there would be IHT to pay on the gift as it depends on the size of the rest of the estate, but in short, no tax to pay on receipt of the gift and after 7 years certainly no IHT to pay under any circumstances. 

Sistergold

You will not be asked to explain why you want to ditch your fix as long as you pay the penalty and have your payslips and meet affordability to remortgage. So yes after December you can just remortgage and it will be worth going with a bank which had straightforward login to monitor while you are away.

Leon12

Hi All,

Thank you very much for all of the answers and they all seem encouraging so that's good to know.

Out of the three, the one that is / was probably the biggest concern to me was number 1 so you don' think in reality that will be an issue? I will 100% get it done before I head off as I don't want the hassle of having to do that whilst away even if it would still be simple to do when away as I will want to just get it all sorted before going. My concern is that as I am unable to login and do it all online I am therefore in a position where I have to speak with someone on the phone and I am concerned they will start asking all sorts of questions along the lines of 'why not just wait a year and then you don't have to pay any early repayment charges' or something like that but if in reality that is unlikely to be a problem then that's good.

 Thanks for the answers to points 2 and 3 as well, that is also reassuring. It seems the tax one is largely how I thought but I was concerned as well about number 2 so that's good if that wont be an issue.

Thanks again.

Leon

Leon12

Sorry just to further clarify something as well, I will search around at other mortgage deals in December once the ERC drops to 1% from its current 2% but the most likely thing is that I will stay with NatWest just fir ease as opposed to re-mortgaging to a different lender but I think from the above this should still be fine and they still shouldn't ask any difficult questions about why I am paying the 1% ERC in December?

Thanks

Leon

simon_or

Honestly, I don't think NatWest will care enough to ask any 'difficult questions' about why you're switching rates early. You can just say that you expect rates to rise sharply and so want to protect yourself before that happens.

Leon12

Thanks Simon, that's great and thank you everyone else for your help and answers too.

Leon