mortgage advice - complex case!

originalmiscellany

Hi there, a long term reader but first post from me!

Right I'll explain this as simple as possible.

I co-bought my house (for 127k) with a friend at a fixed rate 5 year mortgage which expires in December 2008. We split the mortgage equally; total payments are around £600 - as we put down £10k each as a deposit; therefore the mortgage is for £107k.

I am getting married this summer, and my good lady has a mortgage with Northern Rock, for £90k, which expires in June 2008. Her house is currently worth £120k.

Northern Rock state that they're not able to offer a preferential rate to customers, and are asking her to change mortgage providers. We want to put the house on the market in August, sell it and use the capital to put into my house (127k).

Now then; what would be the best thing to do with the 90k house?
Keep Northern Rock on for a few months at a higher rate, but allowing continuity and no expensive changes of mortgage?

The money in that 90k house is the money we'd be planning to use as an extra deposit when we re-mortgage the 127k house.

Money:
We have a joint income of around 60k; We will be splitting the shared "profit" of the 127k house; which will be around 25k each, and we have another 8k each put aside - a total of say £32k.

Can some explain what my best solution could be?

Thanks

Gorgeous_George

Dump your wife-to-be and marry your friend - less confusing

1. Put the house on the market now with a view of completing the sale around June 2008. Assuming a fair wind and the property sells close to your valuation, there will be about £15K to £25K available towards the new mortgage.

2. Will your friend continue to live in the property or are you buying him/her out (I think that buying him/her out would be better in the long term. S(he) could stay on as lodger but you will want the nest to yourselves). Or is your friend also your future wife - I'm lost.



3. If buying the friend out then you will have

£25K from the profit on your house
£15K to £25K from the profit on your good lady's house
£16K joint savings

Total £56K to £66K?

You'll need a mortgage for your current home (value = £177K) of £121K-ish.

Am I right so far?

GG

originalmiscellany

1. Put the house on the market now with a view of completing the sale around June 2008. Assuming a fair wind and the property sells close to your valuation, there will be about £15K to £25K available towards the new mortgage.

Well, we're not moving in until August, and accordingly won't be put on the market until then really; as with prep etc, she has housemates, it won't be practical.

My friend is moving out, and I will buy him out. I think you're roughly right on the figures at the moment;

How easy is it to get a bridging loan for say 6 months, but where you can pull out at any time?! It's really confusing, but I appreciate your feedback Gorgeous George

poppy10_2

6 months is pushing it a bit for a bridging loan.

originalmiscellany

that's what I thought... But we need basically something to tie us over for an infinite period of time.
I guess ultimately the easiest solution might be to just carry on with the northern rock rate for however long it will take until we sell it?

silvercar

Or a deal with low arrangement fees at the start and no early redemption fees.

poppy10_2

originalmiscellany wrote: »

that's what I thought... But we need basically something to tie us over for an infinite period of time.

???:eek::eek::eek:

originalmiscellany

poppy! infinite... If it's on the market it could sell within a month, or within 6 months. It's hard to say quite how long really

poppy10_2

I think you mean indefinite rather than infinite

originalmiscellany

yes! you are right. indefinite is correct

originalmiscellany

Well, 2 years on down the line, I have and update:) Time flies when you're having fun!

House 1 mortgage is down to 80k - mortgage deal with Halifax at base rate + 0.5% expires in November 2010.
House 2 mortgage is still at 76k interest only on a buy to let at base rate + 2%.

We have some savings, approx £30k...

Options:
a) Leave house 1 on SVR after November 2010 until base rate goes up to a higher % then lock ourselves into a 5 year fixed deal.
b) This is the one I am considering: Putting House 1 and House 2 on an offset mortgage - is this possible? The houses are valued at say 270k between them, although as house 2 is on a BTL, is it possible to put both on an offset mortage, thus keeping our savings and therefore giving the option to overpay automatically on both properties?
c) Sell up (Still not a good time!)
d) Any other/better ideas...

Is anyone able to give me any thoughts? I think my preferred is an offset, combining both mortgages - although as I say, is it legal to do it?

Thanks