Mortgage coming to an end, may emigrate next year: thoughts?

dgerrard

Current situation:

Bought house at £375k 21/09/2019
5 year fixed mortgage at 2%
Have been overpaying, down to £231758 owed

Need to remortgage pretty ASAP

The big question:  I'm a Canadian citizen, and for the past two years we've been considering moving to my home town.

If that's the case, but we're not sure:

What would happen if we got say another 5 year mortgage, but sold the house after 1 year?  Are there weird penalties, like would that count as an "early re-payment" of the new 5 year?

I have a financial advisor from the initial purchase who I really trusted, but he's been ghosting me for the past few months.  Makes me wonder if he's ill or something.

Any help much appreciated!

Mark_d

Why were you overpaying?  Could you not make a net return greater than 2% using savings/investments?

When you say 5-year mortgage I assume you mean a mortgage with a tracker/fixed/discounted rate for an initial term of 5 years (I presume the full term might be more like 20 years).

If you have a tracker/fixed/discounted rate for an initial term of 5 years, then you would have to pay an early repayment charge if you repay the mortgage within the first 5 years.  If you might be moving abroad in the near future then you should weigh up mortgages with shorter initial terms, and also consider staying on the standard variable rate.

dgerrard

Hmm, interesting.

So put another way:

In a hypothetical situation:  If I had a five year mortgage, sold the house after 1 year, and moved back in with my parents:  would I be charged an "early repayment fee" because I wasn't porting the mortgage over to a new property?

Hoenir

dgerrard said:

In a hypothetical situation:  If I had a five year mortgage, sold the house after 1 year, and moved back in with my parents:  would I be charged an "early repayment fee" because I wasn't porting the mortgage over to a new property?

Yes. Even if you took out a 2 year product same principle would apply. Question of crunching numbers at the time to see what option would be best for your circumstances. Though steer clear of SVR. 

user1977

dgerrard said:

would I be charged an "early repayment fee" because I wasn't porting the mortgage over to a new property?

Why do you think you might not be? You're repaying the loan. It makes no difference to the lender whether you got the money by selling, remortgaging, or winning the lottery.

amnblog

A five rate rate paid off in year two would typically cost you £9,200 in early repayment charges.

Covered if the property rises >3% in value over the two years.