Paying Lump Sum off new Mortgage

navidson

Hello all - My partner and I are in the process of buying our first house together.  We both currently own our own homes and are planning on selling both to fund the new purchase together.

Instead of attempting to sell 2 houses at the same time (which sounds terrifying) - we were considering selling one of the houses, putting the equity from that sale into the new house and then getting a mortgage for the remaining amount.  Once the purchase was complete, we would then move onto selling the other house.

We were hoping that we might be able to pay a lump sum off the new mortgage using the equity from the second house sale - but i'm not sure if this would incur penalty payments or cause issues with the new mortgage? I know that some mortgages allow overpayments within a certain range, but not sure if it is permissible to pay a large chunk at once? 

Does this type of mortgage have a special name which I can research?!

Any suggestions (as always) would be much appreciated :-)

amnblog

The right lender will give you the mortgage you intend to keep long term on one rate, and the top up mortgage you intend to repay short term on another rate with no redemption penalties.

This split sale process will incur extra Stamp Duty Cost on the purchase which you also need to take into account.

There is no 'special name' for this.

navidson

amnblog said:

The right lender will give you the mortgage you intend to keep long term on one rate, and the top up mortgage you intend to repay short term on another rate with no redemption penalties.

This split sale process will incur extra Stamp Duty Cost on the purchase which you also need to take into account.

There is no 'special name' for this.

Thank you - We just want the one 'long term' mortgage if possible, and to able to pay the lump off that single mortgage

jrawle

When I bought my house, I kept my existing flat, and sold it a few months after moving. I took out a tracker mortgage with Nationwide with no ERC so that I was able to pay off a large part of the mortgage with the proceeds of the flat sale as a lump sum overpayment. I could have then switched to a fixed rate deal without incurring a penalty, but the interest rates at the time meant it was best to stick with the tracker for the term. I'd search for a deal with no overpayment penalty, or see a broker if you are unsure.

housebuyer143

navidson said:

amnblog said:

The right lender will give you the mortgage you intend to keep long term on one rate, and the top up mortgage you intend to repay short term on another rate with no redemption penalties.

This split sale process will incur extra Stamp Duty Cost on the purchase which you also need to take into account.

There is no 'special name' for this.

Thank you - We just want the one 'long term' mortgage if possible, and to able to pay the lump off that single mortgage

You want a product with no ERCs, so probably a tracker. Not all are ERC free though so you will have to ask you broker to find one that is. 
Alternatively fix for 2 years and pay off the max overpayment and put the rest in the bank getting interest until you remortgage at the end of 2 years, at which point you pay lots more in.

Archerychick

It’s the over payment allowances that you need to take a look at. First Direct for example allow unlimited over payments, some lenders allow 20% and some 10% across fixed rate deals.

you may be better to take a tracker and then fix after you’ve sold the other property- but you’d need to model out the numbers. Perhaps speak to a mortgage broker as well?