UK mortgage questions

January 19, 2016 8:10 AM

I've got a slightly complicated question about mortgages in the UK...

So my partner and me bought a house a couple of years ago. Well, when I say 'we', the mortgage is totally in her name, as I had just started contracting and couldn't get a mortgage. But we of course go 50/50 on the repayments.

Anyway fast forward to today, and I've been contracting over 2 years now, and can (probably) get a decent mortgage. We've also seen a new house that we like. There's a bit of equity in the current house, maybe £20k worth. So my questions are:

1. Could we stay with the same mortgage company, and somehow get me named on it as well?
2. If so, would we need a deposit? (I'm technically a first time buyer to make it more complicated)
3. Can you use the equity as the deposit if needed? Would I then owe my partner 50% of the equity used?
4. What would the process be if we went for a brand new mortgage with a different supplier?

Thanks! You can probably tell this sort of stuff is over my head.

posted by derbs to Work & Money (3 answers total)

When you move house, the mortgage company will usually close down the existing mortgage account and transfer the balance to a new one. Whether the new one is in your partner's name or is a joint mortgage won't normally be an issue, as it's treated as a fresh mortgage application. You may have to go through a few hoops in terms of proving that you earn whatever you earn, and have a stable job. But on the whole, switching mortgages or moving to a new property is usually not a big hassle.

Staying with the same mortgage company may get you a preferential rate, as they often have specific deals for existing customers. You won't necessarily get a better deal than you would just looking elsewhere, though. Staying with the current lender may mean that you save on some of the fees.

Yes, the equity is normally used to offset the amount you need to borrow (i.e. it becomes the deposit once you sell the first house). Ownership of the equity and the property itself is something the two of you need to decide between you; ideally there should be a legal agreement about who owns what proportion (usually based on the amount each has contributed) and what happens in the case that you separate or have a disagreement about ownership or buying/selling the property.
posted by pipeski at 8:41 AM on January 19, 2016 [2 favorites]

1. Yes, but you would basically be applying for a new mortgage. To be honest though, the best person to answer this is your mortgage provider.
2. You can use your built up equity as deposit. This is exactly the idea behind "getting on the housing ladder".
3. You can "top up" your equity to give yourselves an even more attractive new mortgage, but should not be required. However, your personal contributions are not recognised by the mortgage provider. I'm assuming you just gave your girlfriend money and she paid the monthly bills? There's no way for the mortgage company to know this. As far as they're concerned, you're a new co-owner/borrower. Settling the overal split of the mortgage value between you and your girlfriend is something you and your girlfriend should sort out with a neutral solicitor.
4. Pretty similar to the first time you went for a mortgage except now including yourself as a first time borrower, which may effect what you qualify for (for good or for bad, there are sometimes deals for first time borrowers. I was a first time borrower in my co-ownership and I didn't think it effected us in any way but this was 3 years ago).

I would highly recommend you just spend a Saturday afternoon with an appointment with your current mortgage provider with all these questions. In most cases they want you to stay with them so they will be able to give you details on how best to do this. Ours are nice, ask yours! And shop around! They all deal with this all the time.
posted by like_neon at 8:58 AM on January 19, 2016

1. Could we stay with the same mortgage company, and somehow get me named on it as well?

You'll need to apply for a fresh mortgage. When you buy a property, you have to repay the existing mortgage and take out a new one.


2. If so, would we need a deposit? (I'm technically a first time buyer to make it more complicated)

Yes, usually 10% is payable on exchange of contracts.


3. Can you use the equity as the deposit if needed? Would I then owe my partner 50% of the equity used?

Potentially, no, because you have to pay it up front, on exchange of contracts - so unless you sell your existing property before you buy the new one, that equity won't be available as it'll still be tied up in the existing home. So if you're doing a simultaneous sale and purchase, you'll need to find your deposit from elsewhere pending completion, when the equity will be released.

Also factor in estate agents' fees (usually around 2% + VAT of the sale price), solicitors' fees (probably around £1,500 for a sale and purchase, including Land Registry & search fees) and stamp duty land tax (a sliding scale, depending on the purchase price, and removal fees.


4. What would the process be if we went for a brand new mortgage with a different supplier?

Exactly the same as if you went for a brand new mortgage with the existing mortgage lender. A full application, with an examination of your income, expenditure, credit history and the affordability of the mortgage.
posted by essexjan at 9:49 AM on January 19, 2016