Reply to: Moving and mortgages

[Emma Power Mortgages]

When I got my mortgage I was earning a lot less than I am now as a contractor. I got my mortgage with Santander. I could ask the mortgage broker for his opinion I suppose, but I suspect I'd at least need a year of accounts or whatever so would probably have to wait until December at the earliest anyway. Cheers for the advice

I would highly recommend speaking with a broker about this you may run into a few problems with your current lender, a short conversation with a broker could give you the timescales and options you need to make a decision

[Emma Power Mortgages]

I am currently 1.5 years into a 5 year fixed term mortgage.

If I wanted to move house, I'd have to keep my mortgage or incur a large penalty.

However, I imagine that buying a new house would involve some kind of mortgage-review or adjustment cos the new house would have a different price etc. to the current one. As I've only been contracting for less than a year, I suspect the bank wouldn't give me a new mortgage.

Does anyone know what my options might be, other than waiting for 3.5 more years? Is there any legislation in place to allow you to escape the fixed term clause in a situation that the bank is unable to offer you a new suitable mortgage, or am I scuppered?

This will largely depend on who your mortgage is with. There are options to port the mortgage to a new property and top up the balance, if required, provided your circumstances still meet that lenders requirements. If not you may need to pay the Early Repayment Charges. Your best advice will come from a specialist broker who can ask the right questions and give you answers specific to your circumstances. The initial enquiry and advice should not cost you anything and you can discuss your options

[pr1]

I will be kicking myself for a while, but everyone assumed the low interest rates were only a short term blip!

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[NibblyPig]

Traditional lenders/brokers will require 3-5 yrs accounts to prove income. If you want to stay with the same provider that will be the case.

There are a number of specialist brokers, (I use Contractor Financials - others are available) that deal with a smaller panel of lenders that are willing to provide underwritten mortgages for contractors. Some want accounts but maybe only 1-2 years, others will base lending on your day rate. Its a good idea to be able to prove renewals.

We just completed our renewal with them and its the Halifax that provide the mortgage. We have 2 parts to the mortgage on different rates and unfortunately different end dates for the rate. So its the bigger of the 2 that we just renewed.

Any mortgage advisor will do the sums for you, ours figured out if it would be worth our while to pay the penalty on the smaller one to bring them into line in one loan. turned out it wasnt worth the hassle so we still have 2. They would do the same for you and figure out if its worth while to pay the penalty, port or whatever.

We took a hit about 10 years back. when i was a permie, we had a mortgage tracking the LIBOR rate. pretty much the month after we completed it climbed above the BoE base rate and kept going. it became unaffordable and it cost us 8k to get out of the 5 year tracker. but it was worth it in the long run.

Thanks for the info. I will have to wait a bit then ask.

I regret so much tying in for 5 years fixed. A flexible tracker would have been so much better - no overpayment charges, no fixed term, no set up fee, interest slightly lower than the fixed amount, grargh. Unless interest rates skyrocket in the next 3.5 years I will be kicking myself for a while, but everyone assumed the low interest rates were only a short term blip!

[northernladuk]

Are you sure and have you asked your mortgage adviser?!

Touché sir, but oddly enough I did yes as it was a Birmingham Midshires mortgage which aren't available to the public. It was a ridiculously good product, good rate with unlimited over payments and drawdown. I wonder if that's the reason they refused or just that lender doesn't do dual products. Interesting.

[Bluespider]

Traditional lenders/brokers will require 3-5 yrs accounts to prove income. If you want to stay with the same provider that will be the case.

There are a number of specialist brokers, (I use Contractor Financials - others are available) that deal with a smaller panel of lenders that are willing to provide underwritten mortgages for contractors. Some want accounts but maybe only 1-2 years, others will base lending on your day rate. Its a good idea to be able to prove renewals.

We just completed our renewal with them and its the Halifax that provide the mortgage. We have 2 parts to the mortgage on different rates and unfortunately different end dates for the rate. So its the bigger of the 2 that we just renewed.

Any mortgage advisor will do the sums for you, ours figured out if it would be worth our while to pay the penalty on the smaller one to bring them into line in one loan. turned out it wasnt worth the hassle so we still have 2. They would do the same for you and figure out if its worth while to pay the penalty, port or whatever.

We took a hit about 10 years back. when i was a permie, we had a mortgage tracking the LIBOR rate. pretty much the month after we completed it climbed above the BoE base rate and kept going. it became unaffordable and it cost us 8k to get out of the 5 year tracker. but it was worth it in the long run.

[NibblyPig]

When I got my mortgage I was earning a lot less than I am now as a contractor. I got my mortgage with Santander. I could ask the mortgage broker for his opinion I suppose, but I suspect I'd at least need a year of accounts or whatever so would probably have to wait until December at the earliest anyway. Cheers for the advice

[TheFaQQer]

Nope, we did the same some 17 years ago. The mortgage was made up of two parts with different interest rates.

We had similar when we moved here 13 years ago - one mortgage was ported from YBS and then a top-up mortgage for the balance of the house. They were at the same rate though.

I still have the mortgage account, but with a zero balance - just in case I need yo do something daft like buy another church...

[SlipTheJab]

Not mean.. It's tongue in cheek..

Am surprised at the comments about porting to more expensive houses though. Something must have changed because this was a no no awhile back. You couldn't have two products against one asset even if it was the same lender. It would make sense if the it's the same lender and the house is worth more than the two mortgages but I'm sure that's how it used to be.

Are you sure and have you asked your mortgage adviser?!

[mudskipper]

Not mean.. It's tongue in cheek..

Am surprised at the comments about porting to more expensive houses though. Something must have changed because this was a no no awhile back. You couldn't have two products against one asset even if it was the same lender. It would make sense if the it's the same lender and the house is worth more than the two mortgages but I'm sure that's how it used to be.

Nope, we did the same some 17 years ago. The mortgage was made up of two parts with different interest rates.

[northernladuk]

Not mean.. It's tongue in cheek..

Am surprised at the comments about porting to more expensive houses though. Something must have changed because this was a no no awhile back. You couldn't have two products against one asset even if it was the same lender. It would make sense if the it's the same lender and the house is worth more than the two mortgages but I'm sure that's how it used to be.

[SueEllen]

What does your contract say?

Rather mean but when I took out a longer fix the mortgage provider told me at least 3 times verbally plus in their documentation in decent sized print, what I needed to do if I want to move during the term.

Some now use the portability of their 5+ years fixes as a selling point.

Simply as no mortgage provider wants to end up in another mis-selling scandal like they had with endowment mortgages.

[SlipTheJab]

Who is the mortgage with?

When you move, although you can port your existing mortgage product to the new property, you would indeed be reassessed for affordability based on your new circumstances. If the new property requires a bigger mortgage, then the difference between your existing mortgage and the new one would require a current product.

If your mortgage provider doesn't accept you (i.e. they aren't contractor friendly, or you don't meet their lending criteria) but another provider will then you would need to pay the early redemption charge to get out of your existing one.

+1 I had exactly this, my mortgage is made up of 2 separate loans, I was permie when I did move though so was able to continue with my original lender.

[chopper]

Who is the mortgage with?

When you move, although you can port your existing mortgage product to the new property, you would indeed be reassessed for affordability based on your new circumstances. If the new property requires a bigger mortgage, then the difference between your existing mortgage and the new one would require a current product.

If your mortgage provider doesn't accept you (i.e. they aren't contractor friendly, or you don't meet their lending criteria) but another provider will then you would need to pay the early redemption charge to get out of your existing one.

[northernladuk]

What does your contract say?