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    • lou1182
    • By lou1182 3rd Oct 17, 1:09 PM
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    lou1182
    Splitting Mortgage Payments with Partner - Porting mortgage
    • #1
    • 3rd Oct 17, 1:09 PM
    Splitting Mortgage Payments with Partner - Porting mortgage 3rd Oct 17 at 1:09 PM
    Hi

    My partner and I are buying a house where each one of us has 50% equity.

    The amount of the loan is £380,000. Our plan is to split the monthly payments 50/50 for the next 24 years.

    My partner wants to port his old mortgage to the new property, i.e. porting the repayment of £107,196 at 3.34% rate to the new property.

    Question 1: Could anyone who has been in a similar position tell us please if it's a good idea to do so? my partner is saying that this will save him 'exit' fees from his old mortgage.
    Question 2: Is the 50/50 split of monthly payments still fair to both of us? I'm asking because the mortgage offer shows that:
    of the £380,000 borrowed money:
    - £107,196 is to be paid at 3.34% rate (the ported portion of the mortgage)
    and
    - £272,804 will be paid at 1,99% rate

    My partner and I just want to make sure that none of us is paying more than they should in this new mortgage.

    Thank you!

    Linda
Page 1
    • getmore4less
    • By getmore4less 3rd Oct 17, 2:19 PM
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    getmore4less
    • #2
    • 3rd Oct 17, 2:19 PM
    • #2
    • 3rd Oct 17, 2:19 PM
    when does the ERC finish? (ie how long is left on the fix?)

    How big is the ERC.

    how does it align with the new part.

    LTV

    is this the best deal you can get, what if you paid the ERC and combined could you get a better rate from a different lender.

    Are you putting in equal deposits?
    ........................................
    by bringing the ERC money he will effectively be gifting you 1/2 that for the rest being on a higher rate.
    • lou1182
    • By lou1182 3rd Oct 17, 2:33 PM
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    lou1182
    • #3
    • 3rd Oct 17, 2:33 PM
    • #3
    • 3rd Oct 17, 2:33 PM
    Hi

    Sorry I'm not very familiar with the financial vocabulary but I'll try to provide as much information as I can.

    The ERC on the first property will finish in 9 years. That's why my partner is saying that the 'exit' fees are quite high, hence the 'mortgage porting' is a better option.

    Our deal on the new property is:
    - £107,196 to be paid at 3.34% fixed rate for 5 YEARS (This is the ported portion)
    and
    - £272,804 will be paid at 1,99% fixed rate for 5 YEARS

    After the expiry of 5 years, we will switch to a variable rate.

    Both my partner and I are putting equal deposits, and intend to split the monthly mortgage payment 50/50.
    Actually we do go 50/50 on all life expenses, bills, etc..

    <<by bringing the ERC money he will effectively be gifting you 1/2 that for the rest being on a higher rate.>> --> Could you please expand a little more?

    Thank you and appreciate your help.
    Linda
    • Tom99
    • By Tom99 3rd Oct 17, 2:46 PM
    • 680 Posts
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    Tom99
    • #4
    • 3rd Oct 17, 2:46 PM
    • #4
    • 3rd Oct 17, 2:46 PM
    Sounds like your partner should pay the extra 1.35% on £107,196 for the 1st 5 years.
    • getmore4less
    • By getmore4less 3rd Oct 17, 2:47 PM
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    getmore4less
    • #5
    • 3rd Oct 17, 2:47 PM
    • #5
    • 3rd Oct 17, 2:47 PM
    Hi

    Sorry I'm not very familiar with the financial vocabulary but I'll try to provide as much information as I can.

    The ERC on the first property will finish in 9 years. That's why my partner is saying that the 'exit' fees are quite high, hence the 'mortgage porting' is a better option.

    ...........

    <<by bringing the ERC money he will effectively be gifting you 1/2 that for the rest being on a higher rate.>> --> Could you please expand a little more?

    Thank you and appreciate your help.
    Linda
    Originally posted by lou1182
    need that ERC number,
    9 years seems a long time unless he just got a 10y fix, if that's the case why are they letting him port and reduce the erc time to 5years?


    I may have that idea the ERC kind of gets split wrong, he just ends up with less cash if he pays it and you still borrow the same amount.
    • lou1182
    • By lou1182 3rd Oct 17, 4:20 PM
    • 8 Posts
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    lou1182
    • #6
    • 3rd Oct 17, 4:20 PM
    • #6
    • 3rd Oct 17, 4:20 PM
    <<9 years seems a long time unless he just got a 10y fix, if that's the case why are they letting him port and reduce the erc time to 5years?>>

    -> You're right.. I just checked the mortgage offer again and it states that the 'ported' portion of the mortgage is to be paid at a fixed rate of 3.34% for 98 MONTHS (that's just over 8 years).
    And yes, my partner just signed a 10y fix deal a couple of years ago.
    • lou1182
    • By lou1182 3rd Oct 17, 4:22 PM
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    lou1182
    • #7
    • 3rd Oct 17, 4:22 PM
    • #7
    • 3rd Oct 17, 4:22 PM
    << Sounds like your partner should pay the extra 1.35% on £107,196 for the 1st 5 years.>>

    -> Is there an online simulator that could help us run this calculation?
    • getmore4less
    • By getmore4less 3rd Oct 17, 4:38 PM
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    getmore4less
    • #8
    • 3rd Oct 17, 4:38 PM
    • #8
    • 3rd Oct 17, 4:38 PM
    How much is the ERC.

    If he does not port you can look at other lenders.
    • wantonnoodle
    • By wantonnoodle 3rd Oct 17, 4:43 PM
    • 217 Posts
    • 149 Thanks
    wantonnoodle
    • #9
    • 3rd Oct 17, 4:43 PM
    • #9
    • 3rd Oct 17, 4:43 PM
    If you were still in the process of sourcing the additional mortgage on top of the ported element, I would have strongly recommended you find a broker who would be able to help you complete this calculation, however it seems you are much further down the line than that.

    It may be possible to find some sort of independent financial adviser or accountant who would be able to advise on the arrangements however I'm not sure what this would cost, as I would expect it to be quite complex.

    I would be minded to agree though, that your partner should be covering the additional interest on the ported value as this was a rate that you have not had any say in.
    • Tom99
    • By Tom99 3rd Oct 17, 4:48 PM
    • 680 Posts
    • 403 Thanks
    Tom99
    << Sounds like your partner should pay the extra 1.35% on £107,196 for the 1st 5 years.>>

    -> Is there an online simulator that could help us run this calculation?
    Originally posted by lou1182
    If the facts are as straight forward as you have suggested ie you are paying an extra 1.35% on £107,196, then you are paying an extra £1,447 pa or £120 per month.

    If your new mortgage is a repayment one then that figure will reduce a little each month as capital repayments are made.

    You also need to work out the total of the extra interest you will pay v the early repayment figure to make sure it is worthwhile porting the existing mortgage.
    • getmore4less
    • By getmore4less 3rd Oct 17, 5:19 PM
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    getmore4less
    It is not as simple as the payments because the capital parts are on different schedules.

    I will do the numbers later with an explanation.
    • getmore4less
    • By getmore4less 3rd Oct 17, 7:48 PM
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    getmore4less
    ok if we start from

    1. you have no part in the previous property
    2 you want to buy the new property 50:50.

    For 2. you need to fund 50% each with cash or debt.

    as you say the deposits are already sorted(assume purchase fees the same 50:50)

    Between you you need to borrow 50% each of the rest( £107,196+£272,804= £380k £190k each).

    you pay £190k worth of the top up and the OH pays the rest and all of the bit he is bringing with him.

    easiest way to do this is to treat it as 3 virtual loans that way you can deal with any overpayments in a simple way.

    The issue is there are 2 elements to any repayment mortgage(interest & capital) and what you need to do is make sure you are servicing your share of the debt only(£190k @ 1.99%)

    Trying to adjust the other bit pretending some is @ 1.99% will not be so easy/obvious, interest only it would be easy.

    the split becomes

    YOU
    £190k 24y @ 1.99% on 5y fix
    payment £830.29pm in 5 years you owe £157,525

    OH
    £82,804k 24y @ 1.99% on 5y fix
    payment £361.85pm in 5 years he owe £68,651

    £107,196 24y @ 3.34% on a 8y(ish) fix.
    payment £541.60pm in 5 years he owes £91,336
    total payment £903.45 in 5 years £159987

    .................................................. ......
    if you split 50:50 both bits
    £272804 24y @ 1.99% on 5y fix
    payment £1192.14pm in 5 years owe £226,176

    £107,196 24y @ 3.34% on a 8y(ish) fix.
    payment £541.60pm in 5 years owe £91,336

    totals each £866.87 in 5 years £158756

    that makes the difference in your payment less than £37pm and after 5 years the amount you owe less than £1250.

    Are you going to be splitting all your finances within this sort of amount less than a meal out a month.

    ....................................
    If you do want to go this accurate.
    overpayments obviously it is better to overpay the higher rate.
    If you want to overpay say £1k on you bit.
    You transfer £1k cash and £1k of your 1.99% rate to the OH and he pays the cash off the 3.34% rate

    With the mortgage calculators or spreadsheet it will be very easy to keep track of the 3 parts even with regular overpayments

    ...................................

    Still need the LTV and the ERC to see if porting is the best option
    Last edited by getmore4less; 04-10-2017 at 3:55 AM.
    • lou1182
    • By lou1182 4th Oct 17, 11:23 AM
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    lou1182
    Thank you Tom99, £120 is quite a big gap.

    Would you mind sharing with us the method of calculation for future reference?

    Thank you!
    Linda
    • SeduLOUs
    • By SeduLOUs 4th Oct 17, 11:32 AM
    • 2,094 Posts
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    SeduLOUs
    Thank you Tom99, £120 is quite a big gap.

    Would you mind sharing with us the method of calculation for future reference?

    Thank you!
    Linda
    Originally posted by lou1182
    It's 1.35% of £107,196.
    • getmore4less
    • By getmore4less 4th Oct 17, 11:38 AM
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    • 18,410 Thanks
    getmore4less
    Thank you Tom99, £120 is quite a big gap.

    Would you mind sharing with us the method of calculation for future reference?

    Thank you!
    Linda
    Originally posted by lou1182
    Problem is the method needs further work to get the position in 5 years.

    What happens to the £120pm?
    • lou1182
    • By lou1182 4th Oct 17, 11:42 AM
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    lou1182
    getmore4less - Thank you so much for your detailed answer! I like your method of splitting the mortgage into 3 pieces.. I can see us following the same method in the future when the rates go higher...
    Right now the difference in payments (£37pm) is not worth considering. We'll see what the future brings.

    Thanks again!
    Linda
    • getmore4less
    • By getmore4less 4th Oct 17, 11:56 AM
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    getmore4less
    don't forget the trust deed to document how the shares work

    It is easier to separate the debt from the equity as you can pay down your own debts at your own rates,
    input into the property for maintenance and improvements should remain at the equity shares(50:50)

    Then there are the conditions for any separations, buyouts sale etc.

    then the can't pay, won't pay(this one is easier with the debts described separately as you can move the debt around without changing the equity shares
    • lou1182
    • By lou1182 4th Oct 17, 12:04 PM
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    lou1182
    getmore4less - Our solicitor has already drafted a deed that explains the shares..but thanks for the reminder

    Thank you again and have a great day!
    Linda
    • getmore4less
    • By getmore4less 4th Oct 17, 12:21 PM
    • 30,798 Posts
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    getmore4less
    getmore4less - Our solicitor has already drafted a deed that explains the shares..but thanks for the reminder

    Thank you again and have a great day!
    Linda
    Originally posted by lou1182

    Careful, a lot of solicitors get this wrong ,,

    people come hear quite regular with problem trust deeds poorly written.

    The key for yours will be explaining how the debt works.
    • lou1182
    • By lou1182 4th Oct 17, 12:28 PM
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    lou1182
    Ok.. We'll make sure that the deed describes the debt as well, so it's all nice and clear.

    Thanks
    Linda
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