Moving jobs and early redemption of mortgage - logistics(4 Posts)
We bought a house 3 years ago and thought we were being sensible by going for a 5 year fixed term mortgage as we were planning a family. We live 100 miles from our families and it has always been on the agenda to go home at some point, but as jobs in my line of work come up very infrequently it has always been a longer term plan (especially as I now want to be part time - 2 such jobs have come up in the last 9 years).
I had always planned on going back to work full time, but now my little boy is here I don't want to leave him so have negotiated a 4 day week (I'm the main earner and we can't afford for me to drop any more).
Last week, wouldn't you know it, my dream job, part time, has come up in my home town. We looked at the figures, and even if DH ended up working at the minimum wage we would earn enough to live on (houses are around 1/2 the price at home as they are where we currently live and we'd have free childcare).
We're desperate to move....however.....this fixed term rate comes with a penalty for early redemption, which will be in the region of £10,000. Long term, we don't mind sucking up additional expenses, but I just can't see how it's logistically possible to move. If we port the mortgage, we only pay the fee on the difference, however, I don't think we stand much chance of qualifying for a mortgage straight away, as i will be part time and DH will be temporarily out of work. So we have to plan to pay the fee anyway. We should be able to sell the house for more than we paid for it and, looking at other houses we may have £40-50k equity in it, which would enable us to pay the fee, costs and save enough for a deposit in the future (the deposit was a gift from my in-laws and unless we get it back we stand no chance of ever saving it again). I'm worried that if the worst happens and we don't sell our current house quickly and DH can't find a job quickly enough we won't be able to afford the mortgage.
Am I crazy for even considering this? It's our dream to go home and for our little boy to grow up close to his family, rather than only seeing them every few weeks. And the job pays perfectly well enough for us to live, even though we will never be rich. However, it all has the potential to go so disastrously wrong as well. We are getting detailed figures this week (valuations on house and mortgage redemption cost), but I was wondering if anyone had been in a similar situation or has any advice on how to get through this without losing everything?
Just putting figures on to explain further:
Current mortgage: £1200 pm
My wage: £2000 pm
DH wage: £1,200 pm
Childcare: £500 pm
Future mortgage: possibly. £700 pm
My new wage: £1200 pm
DH main wage £1000 pm
But free childcare
House bought for £234,000
Current value possibly £250-260,000
Early redemption fee: £10,000
Outstanding loan: £210,000
But obvs if house doesn't sell or DH is out of work for some time we're screwed!
I would speak to an independent adviser, he or she would help you get the facts and figures completely straight and would have experience of the logistics of porting you mortgage. They would also know lender criteria regarding what you could borrow on your income.
Shorter term might it be possible to rent, and let out your current property until the ERC isn't a factor?
How long until the early redemption fee is up?
I'd let it out and rent.
Or can you go home and they follow in time?
Can DH go ahead, stay with rellies and get a job, commuting back at weekends?
Then price your house to sell - that's the key to selling it!
Not sure about renting your house out, you'd have to let your mortgage co know and they'd want to move you to a buy to let mortgage which may incur the fee anyway.
I'd speak to the mortgage lender, get the lowdown on their offering and what the fee really is.
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