This is probably a bit of a dumb question to the initiated, but…

I have 3 years left on a 10 year fixed mortgage with the Nationwide. The interest rate is high, and there is a 3% early redemption penalty. Does the redemption fee only apply if you pay early while living in the same house?

We’re looking to move to a new, larger house. Can I now take out a new mortgage (with a new lender) to cover the existing mortgage plus the additional mortgage I would need for the new house, without being subject to the redemption fee?

Do you basically scrap any existing agreements and start again?

I would have thought not. We effectively have 2 mortgages with Nationwide because of this.

But isn’t the original contract secured on a particular address? How does that just carry over, if you move to a new property?

It just moves over and you get a new mortgage for the extra. You might be able to pay it off but I expect it will cost you.

OK. thanks. It may still be worth my while taking the hit on the fee.

I’m pretty sure we were told you can’t have two mortgages on one property. As you’d no longer have the old property, you could no longer hold the old mortgage against it. So, either you clear the old mortgage and take out a new one for the new property, or you extend/renegotiate the old one to cover what you need for the new house. A modern mortgage might be cheap enough to cover the fees on the old one and still save money. Extending means you’re tied into the same company.

You can have two mortgages on one property. I recently changed from Britannia to HSBC and at the same time borrowed extra for an extension. They way they wanted to manage it was to move over the existing mortgage and for the extra for the extension take out a second mortgage just to cover that – the same mortgage product for both amounts.

Redemption penalties usually apply for the period of your fixed or discounted rate. Its to cover lost revenue if you bail out early – god forbid the banks should take any risk of losing money.

Sorry, I meant I didn’t think you can have two mortgage providers on one property. We were offered to stay with hsbc on our current deal when we move and also have an extra mortgage with them for the difference but we couldn’t port our existing mortgage and then cover the shortfall with another provider. IANAMA.

As a nationwide mortgage adviser. You have one mortgage on the new within it 2 elements – your current rate/deal on your current home transferred to the new home and thus no early repayment charge. The second element the extra you need to buy the new home on a completely new rate. Try and get s new 3 year deal on this so at least both elements finish roughly same time in 3 years and then can get one new rate on both elements. Very rare to pay the early repayment charge on your current mortgage and claw that back over next three years on any saving the new rate offers. Not impossible but rare.