Please can someone explain this "portabilty" lark??!

Organic12

Hiya,

My exisiting mortgage is coming to an end and I'm looking to remortgage (at the moment FD's 2yr fixed rate of 5.19% looks a strong contender).

I think I might be moving in 12-18mths time. I understand most products are portable so I'm guessing I just change the address/deeds etc when I buy my next place?

I don't understand how increasing the mortgage value works though! Say I have a mortgage of £150k currently and need an extra £50k to buy my new place. Am I restricted to my current mortgage provider to get the £50k?

Presumably, I'd have to go for a product without early redemption fees so that when my first mortgage (the £150k) expired I would be free to remortgage it all, £200k?

I'd love it if someone could please help me clear up my confusion. I just can't work it out

Thanks loads,
O

Ian_Griffiths_Halifax

Usually the portability option would mean that, so long as you still qualify for a mortgage with them when you wish to move, then you could take the same deal with you to the next property.

If you need to borrow less, then they would usually charge you a proportionate penalty on the amount that you don't take with you.

If you need to borrow more, then you would usually need to borrow this at whatever rates are available from them at that time. This may leave you with 2 different penalty end dates.

I know that Northern Rock allow people to port their mortgage and borrow more on the same deal they took originally, but I can't think of any other lender off the top of my head.

herbiesjp

Also remember that porting a a mortgage is treated in exactly the same way as a new mortgage application - so whole new process and all the documents over to the lender again

Please beware that if your circumstances have changed in that period, or if a lender has changed their criteria in that period, they may not necessarily agree to porting, and then you will have a penalty to leave the lender or postpone the move

There are no guarantees that a lender will agree to porting - and there have been posts on here from people who have been refused for various reasons

Dick_here

Portability means that - providing you meet all the other criteria for your new loan - you can take out the original amount borrowed on a new property at the same fixed/tracker rate and you don't pay the early repayment fees.

Ian_Griffiths_Halifax

!!!!!!_here wrote: »

Portability means that - providing you meet all the other criteria for your new loan - you can take out the original amount borrowed on a new property at the same fixed/tracker rate and you don't pay the early repayment fees.

Not necessarily. I know it's being a bit picky but more often than not you can only port the outstanding balance, not take a new loan at the same original amount borrowed.

herbiesjp

Also note that if you have a non simultaneoud sale and purchase i.e. your sell yours first and then you buy the new property say 4 months later, the Early Repayment Charges are indeed payable, though they should be refunded if you complete the purchase within a specific period of time.

All these criteria details would need to be checked when looking to port the mortgage, as you would not want to start the process and then find the timescale for porting has expired meaning you have to pay the penalty and also find a new deal

babirusa_rose

In answer to the question about do you have to stay with your current provider for the additional finance. No, but you would be well advised to as second mortgages are almost always at a higher rate than further advances from the same lender.

Organic12

Okay, I think this is how I understand things:

When I decide to move, I should first check the timescale concerning portability. I would only be able to take the outstanding amount with me, not go back to the original outstanding value.

I can look to get the funds from other banks but this would proably cost more. (Wouldn't that mean that two providers have claims to the property though? Or is it just proportional to their stake?)

As long as I meet the criteria on my current and new product at the time of moving, then I can borrow more at whatever rates the current provider offers at the time? The criteria on the current product may have changed.

I would however be required to provide all the paperworkd, payslips, P60, bank statements, that sort of thing.

From the comment about people being denied portability, it seems that these products are rather "possibly portable"?

Thanks for helping me out everyone. I must admit my brain hurts,
O

Ian_Griffiths_Halifax

You've summarised pretty well there. Well done.

dimbo61

You would be better off with just one lender having a charge on your property so I would look at affordability.
If you have a £150,000 mortgage and wanted to move to a bigger house could you afford a £200,000 mortgage and would any lender in the current climate want to lend you that amount of money.
If you have been paying the mortgage and overpaying by say £200/300 a month then you have proved that you can easily afford a larger loan BUT that does not mean they will give you a bigger mortgage.
Why are you now looking at only 2 year deals ? Think long term say 5 years
Good luck
How much equity do you have in your property

Organic12

Hiya,

Thanks loads, reassuring to know that I'm beginning to understand things!

Yes, I believe I can afford a larger mortgage and have been a bit of a squirrel in stashing funds away.

I have also made payments against the capital of my mortgage, to show I was in a position to pay back.

I did consider a longer product but with the notion of moving, I question if it's suitable. As mentioned, "Portability" seems to mean, "possibly portable" and I do not won't to be stuck as I opted for too long a product.

Thanks everyone,
O