JamieMacdonald

My girlfriend and I are looking to buy a house together. We currently live in her flat which is on the market; I have a lodger in my flat but will be putting it on the market next week.

We both have a fixed rate mortgages and will incur redemption penalties if we pay them off early.

My redemption penalty (approx. £2k) is a lot less than hers (£4k), so we are thinking I'll sell mine and pay the mortgage off (will still leave me with quite a bit of equity), then we will move hers to our new house and change it to a joint mortgage. Apparently hers is portable, not sure if mine is.

Does this sound like the most feasible way of doing this? And;
Do I really need to sell my flat first, or does it not really matter?

We've not spoken to our mortgage companies yet.

I mentioned splitting the redemption penalty between us - she seems to think that I should pay it off using MY equity but not too sure I think that's fair!!

brumdaisy

personally I'd get the facts from your mortgage people first, then you know what decisions are available to make! For example just because a mortgage is portable doesnt mean you can put it into two names, or that you wont incur penalties (sorry I mean perfectrly reasonable administrative fees ) doing so.

Re your last point. Depends. How are you going to split other financial matters? Are you going to chuck it all in one pot to share regrdless of who brings the most in or are you going to split things, keep your own bank accounts etc ?

There's only a 2k difference which in the scheme of things isnt massive - have you thought about converting one into a buy-to-let? If so sell the most difficult to let/least profitable one.

HTH

andy97

iTrader: (1)

transfer the mortgage to new property, but check contract fine print first

JamieMacdonald

Yes, I keep asking her to check that.

At the end of the day, if we can't change one of them to a joint mortgage then we would stand to lose over £6k in redemption penalties, which I don't think is worth doing, so we would have to wait until one of our fixed terms ends (2008 for mine).

I've thought of keeping my flat and changing it to a let-to-buy mortgage 85% LTV which would free up a small amount of equity, but then it would become an additional property and AFAIK that means I would have to pay 40% tax on any capital growth I have made when I come to sell it? Don't really want the hassle.

We're splitting the mortgage and bills straight down the middle, but I will be paying all of the deposit so this will be taken in to account if we ever went our seperate ways and ended up selling the house. I'm not really too fussed about being the one having to foot the redemtion penalty, but I am kind of hoping that she was joking!

Cheers,
Jamie
PS. Perfectrly reasonable administrative fees, lol

JamieMacdonald

BTTT to see if there are any mortgage experts with any advice?

Will ask gf to ring her mortgage company today and check options available on her mortgage (she is with Barclays/Woolwich I believe).

I just have a horrible feeling we are going to get shafted, but she has her heart set on moving now!!

Scooby-Doo

Be careful selling your flat if you have been renting it out. If it is not your primary residence you are liable to capital gains tax on the profits of the sale.