Porting mortgage - mad bloke on telephone

sunstormrider

Hi all

I need some sanity - I'm sure what I've just been told on the phone by Nationwide has to be wrong...

We currently have a mortgage with them for £156k but we're moving to a cheaper area where we can get a similar size house for a smaller amount. The new house is going to be around £170k and we'll use about £70k of our equity to finance this so new mortgage will need to be around £100k.

The Nationwide bloke told me I could avoid penalties and reservation fees (my 5yr fixed rate ends in November) by porting. He told me if we port, we would need to pay off the difference between the old and the new mortgage amount i.e. £56k = the old (£156k) minus the new (£100k). This is where I'm getting lost. If I only have to pay them £56k to port the mortgage - that leaves me with effectively £235k-£56k i.e. around £180k so I could buy the new place outright!!!

It's most likely I've misunderstood but he didn't seem too sure of himself - constantly keeping me on hold while he checked things with a colleague.

Please - can someone explain how porting a mortgage would work when the old amount is £156k and all I need to borrow on the new would be £100k.

To be honest, I think it would be a darn sight simpler if I just closed the account when I complete on selling our current place, then started again when we buy - I know I'd cop for the penalty and the reservation fee but it's only £2k which is a drop in the ocean when we're talking tens of thousands.

Cheers
Rob

Emmzi

it is probably that you pay the redemption fee on the art you are not porting. So if you oay back eg 5%, you pay back 5% of the difference, not the total amount.

gauly

If I understand you correctly, I think you are just getting muddled with your maths. You have to pay them £56K now but they still expect the remaining £100K on your mortgage to be paid to them over the mortgage term.

OK, so your current house is £235K with a £156K mortgage - is that right? So, your equity is about £79K.

You get £235K for your house of which £156K belongs to Nationwide and £79K to you. You pay £56K back to Nationwide and buy your new house with Nationwide's £100K and your £79K. Of course you end up with enough money to buy the new place "outright", just £100K of that money belongs to Nationwide and is a mortgage!

DVardysShadow

sunstormrider wrote: »

We currently have a mortgage with them for £156k but we're moving to a cheaper area where we can get a similar size house for a smaller amount. The new house is going to be around £170k and we'll use about £70k of our equity to finance this so new mortgage will need to be around £100k.

The Nationwide bloke told me I could avoid penalties and reservation fees (my 5yr fixed rate ends in November) by porting. He told me if we port, we would need to pay off the difference between the old and the new mortgage amount i.e. £56k = the old (£156k) minus the new (£100k). This is where I'm getting lost. If I only have to pay them £56k to port the mortgage - that leaves me with effectively £235k-£56k i.e. around £180k so I could buy the new place outright!!!

You sell house for 235 and pay back 156. You have 79.

You buy house for 170 and borrow 100. You have 9 left

Lender receives 156 and gives out 100. Lender is happy for you just to give back 56 - but you still owe 100

So you have 179 to buy the new place made up of 79 which is your equity from selling the old place and the 100 which you are still borrowing.

ViolaLass

Essentially, you forgot to subtract your equity from your £235k.

ViolaLass

Or rather, you forgot to subtract the £100k that you will still owe from your £235k to give you the equity.

GDB2222

When I read the original post, I thought it must be a wind-up.

_Andy_

sunstormrider wrote: »

but it's only £2k

"only.." yep, £2,000 is just pocket money. Chump change.

GDB2222

_Andy_ wrote: »

"only.." yep, £2,000 is just pocket money. Chump change.

Apparently, some people will pay that much to avoid a situation they find intellectually challenging. Either that, or it's a wind-up.

kelda_shelton

we'll be porting our mortgage (but also adding to it) when we eventually sell. I have a rate that is 0.75% over the base rate which is foxed for the rest of the term of the mortgage, which is great.

The porting is pretty simple, so I'd assume yours is a flexible mortage - meaning you can pay off lump sums, like the £56K without getting charged and then you just have the £100K remaining.

This is as opposed to you paying fees to end this mortgage and fees to start a new one, and possibly not getting such a good rate.

I'd say porting sounds the best ubnless you're on a really sh*t rate at the moment

mlz1413

only.." yep, £2,000 is just pocket money. Chump change.

GDB2222 wrote: »

Apparently, some people will pay that much to avoid a situation they find intellectually challenging. Either that, or it's a wind-up.

that's a bit unfair as if the OP kept the full mortgage until the end of the 5 yr fixed (7 months) then they would be better off paying the redemeption at £2000

ie 179,000x 5% = 8950/12*7 = £5221 interest payable
100,000 x 5% = 5000/12*7 = £2,917