With ANSWER:Mortgage payments between the sale of the house and purchase of another?

ginvzt

Hi,

we have a mortgage with Nationwide which we took out March 2007. Due to job relocation we are selling our current house and looking for something to buy in the new area (Lancashire). The way things are going we are not sure if we will be able to sell the current home and buy the new one at the same time and therefore we would need to take a few months before sale of the current house and purchase of the new one.

What happens to the mortgage in this case? Is there some time allowance before sale of one house and purchase of the other? I know that Barclays give you 6 months to complete the purchase of the new house. Is this the case with Nationwide?

If there are a few months in between the transactions, do we need to continue making the monthly payments for our mortgage, or would it be frozen against the proceeds of the current house sale until we buy a new one? Or would we be able to invest the sale proceeds in another bank's saving account? If it has to be kept in Nationwide against the mortgage, would we still earn interest on the 'equity' part of the sale?

Could anyone please explain how all this works as we are feeling lost!

Mathsguy

It was my understanding that since a mortgage is secured against the property which it helps to buy, the sale of that property would require the mortgage to be paid off in full from the proceeds of the house sale (mortgage redemption). Since you have only had the mortgage for 13 months, you may be liable to an early repayment charge. Check your agreement.

ginvzt

Thanks, I emailed Nationwide, will see what they say. I know that it is not the case with Barclays (friend just sold the house and is waiting for the purchase to go through) - they give you 6 months to 'move'.

ginvzt

The answer from Nationwide.

Dear Member,

Thank you for your enquiry.

If you move your existing product to a new mortgage on a different property we will waive the Early Repayment Charge and Redemption Expense, if you complete on the new account at the same time (redeem the existing account and complete on the new mortgage on the same day).

If you do not complete on your new property simultaneously we will ask you to pay the Early Repayment Charge and Redemption Expense on redemption of the existing loan. We will refund this back as soon as the new account is completed, subject to a maximum of 6 months between closure of the existing account and the opening of the new account.

An Early Repayment Charge and Redemption Expense will apply if you decide not to take out the new account on the existing rate. The Early Redemption Charge will also be applied to any reduction in the balance i.e. if you borrow less than the existing amount outstanding. If you decide to borrow more you can have the additional money on any of our current products.

Please note that accounts that are currently on our Base Mortgage Rate are in most cases not subject to any penalties.