End of mortgage deal falling just before house sale

Bizmarque

I appreciate the answer may well be "get an IFA", but I'm boggled by the options and thought someone here might see it more simply. Money isn't my strong suit...

We have accepted an offer on our house sale, which will no doubt take a few months to complete.
It will allow us to pay of our substantial mortgage, downsize to another property hopefully allowing us to be mortgage free.

Our current mortgage product ends at the end of June. 

If we do nothing we return to SVR, and payments go up from £850 to £1100, but no ERC. Therefore house sells, mortgage paid off, but we've paid an extra £250/month for an unknown period.

If we accept Accords suggested remortgage we pay £860/month (2 year deal) and when we move out we pay 1% ERC which would be around £1,500.

We thought a short term Interest only would work, paying off capital at house sale time, but they "don't do that for a short term"...

Then I thought we should port the mortgage to the new house, and then pay it off at the end of the 2 year deal.  However we would prefer to be an attractive "cash buyer" in the currently rapidly moving housing market, and porting the mortgage presumably adds another layer to the house purchase.


Is there an obvious way forward to this that I can't see?

Appreciate all points of view...

Thrugelmir

The danger with moving onto the SVR is that interest rates may well rise higher. By opting for a fixed rate you at least can quantify the cost. In addition the longer it takes the entire transaction to complete the less cost to you. 

As for the porting option why pay interest when you've no need to? 

simon_or

I don't understand, is the plan to move into rental or with family when your sale completes in a few months? I'm only asking as you mention being a cash buyer

ACG

Some lenders do have no ERC products. However, they do typically come with an arrangement fee of a grand. 
If you were making an offer on a property I was selling and you said you were porting your mortgage over, I would be pretty comfortable with that. More so than someone having to make a brand new application. Infact more so than a cash buyer. 

The amount of times I have seen "cash buyers" which turns out to be:
- Needing to raise a mortgage against a BTL.
- Needing to raise a mortgage against the property in question.
- Waiting on money from mum/dad/uncle etc - who is...  you guessed it, raising a mortgage.
- Or the worst, a genuine cash buyer who then drops the price at the last minute because they can as there is no mortgage lender to deal with. 

Bizmarque

Thanks, 
All useful points... Helpful to streamline our thinking.
We are viewing and are fairly confident we will find something suitably. We're downsizing and know of houses which would 'do' and aren't selling, but are giving it a couple more weeks to find the best of the bunch.

I'm trying to minimise the cost between end of my current mortgage product and full repayment from proceeds of the house sale, when the SVR is the do nothing option.

Mortgage free, and buying with cash is the aim, but I thought that would be attractive to a seller.. 🤷

theoretica

Ask your current mortgage provider if they can do anything better than the SVR with no arrangement fees or ERC.  Worth asking - they worst they can do is say no.

simon_or

Bizmarque said:

Thanks, 
All useful points... Helpful to streamline our thinking.
We are viewing and are fairly confident we will find something suitably. We're downsizing and know of houses which would 'do' and aren't selling, but are giving it a couple more weeks to find the best of the bunch.

I'm trying to minimise the cost between end of my current mortgage product and full repayment from proceeds of the house sale, when the SVR is the do nothing option.

Mortgage free, and buying with cash is the aim, but I thought that would be attractive to a seller.. 🤷

Perhaps one of those remortgage products with no ERCs, no lender fee, no valuation fee, free conveyancing (or sufficient cashback). I'm pretty sure Nationwide offers it as a tracker, perhaps others as well. Don't know if they'll balk when they see that the property is SSTC though....

Notfarfromtheborder

First Direct Offset, no fee, there is an ERC if the mortgage is closed within the fixed rate period, however there is the facility to fully offset and therefore pay no interest

simon_or

Notfarfromtheborder said:

First Direct Offset, no fee, there is an ERC if the mortgage is closed within the fixed rate period, however there is the facility to fully offset and therefore pay no interest

What's the point of an offset in this situation? If the OP had the cash to offset the mortgage, surely he'd just pay it off soon as it falls on to SVR.

Notfarfromtheborder

simon_or said:

Notfarfromtheborder said:

First Direct Offset, no fee, there is an ERC if the mortgage is closed within the fixed rate period, however there is the facility to fully offset and therefore pay no interest

What's the point of an offset in this situation? If the OP had the cash to offset the mortgage, surely he'd just pay it off soon as it falls on to SVR.

My belief was that when the house sale goes through then the cash would be available to repay / offset the mortgage. The mortgage was needed between the end of June until completion of the sale. One of us has obviously misunderstood.

penners324

Are you sure the ERC on the new 2 year product is 1%? With Accord it's usually 3% for first year then 1.5% for the second year.