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Freehold loan and remortage

Hi, I in the process of selling my flat but to sell my flat I had to first purchase the freehold (about 16K), in about a month this will be complete and then I'm going to sell the flat (for approx 300K) and use the equity (current mortgage at 200K) to pay off the freehold loan and existing credit card debt (6K) and at the same time remortgage to a lower level - a new house purchase about (200K). Would it be better to take a flexible mortgage that I can change in the shorter term (in a year) - to get better rates as a remortgage application made then would mean no credit card debt and no freehold loan on the mortgage application? Many thanks

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It would seem that you would have gross equity after the sale of £78,000 before any sale/purchase expenses. Let us say that the net equity you can apply to the new property is £70,000. That would be 35% of the new property and should get you good rates, provided that you have no defaults on your credit record. By defaults I mean late as well as non-payment of minimum amounts due. Even if the other debts were taken into account, you would still have 24% equity and the rates should not be much different. The biggest differences come below 20%. If they do want to charge you a significantly higher rate, then any variable rate mortgage would do. You would have the benefit of cheaper rates to start with and wouldn't have an Early Redemption Charge. It might be better to sell, redeem the card and loan and rent for a short period before buying debt-free. Mike



Thanks Mike, I think a variable rate for a shorter term might then suit me more as opposed to the 'lost money' of renting for 6 months. cheers Jon



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