Port Mortgage - What does this involve?

taliwillow

Hello all,

I was just wondering if anyone could tell me what is involved in porting a mortgage. We are currently 4 months into a 5 year fixed rate mortgage but we are interested in moving on. Due to the redemption on our mortgage (£5333) we couldn't really afford to change lender, we would have to port the mortgage if they would let us, but we weren't sure if they will need to do credit checks etc. This wouldn't normally be a problem but since we have had this mortgage our financial/mortgage advisor told us casually that he had told a few fibs when getting us this mortgage so we are a bit nervous that it would be considered that we have committed mortgage fraud if they found out that what he told them was a lie.

Any advice would be appreciated.

Taliwillow

dwsjarcmcd

First port of call must be the Financial Adviser to find out what 'fibs' he told, together with why he told them.

AndrewSmith

taliwillow wrote:

Hello all,

I was just wondering if anyone could tell me what is involved in porting a mortgage. We are currently 4 months into a 5 year fixed rate mortgage but we are interested in moving on. Due to the redemption on our mortgage (£5333) we couldn't really afford to change lender, we would have to port the mortgage if they would let us, but we weren't sure if they will need to do credit checks etc. This wouldn't normally be a problem but since we have had this mortgage our financial/mortgage advisor told us casually that he had told a few fibs when getting us this mortgage so we are a bit nervous that it would be considered that we have committed mortgage fraud if they found out that what he told them was a lie.

Any advice would be appreciated.

Taliwillow

Porting an existing mortgage is always subject to underwriting. This will definately involve Credit checks/score and the completion of a new full mortgage application.

Porting a mortgage is treated by the majority of lenders as a new application but keeping the remaining term of any exisitng incentive product such as fixed rate etc. It is not the actual 'mortgage' that is ported merely the remaining terms and conditions, and the interest rate on the existing loan amount. If the mortgage is increased, the difference will be on a product from their current range, if it is decreased then you will pay a redemption penalty pro-rata for the amount of the reduction.

Porting a mortgage is not a foregone conclusion and is not automatically accepted by the lender.

I think it is an absolute disgrace that the FA is admitting lying on the application. You need, as said above, to contact him/her and demand to know what the extent of the 'fibs' were.

It depends on the status of the application, ie self cert, fast track, mainstream etc however the lender reserves the right to ask for whatever documentation or evidence or earnings etc it feels to substantiate the case.

Advisers who do this sort of thing should be publically horsewhipped as it does nobody any favours at all.

Advisers are put under pressure sometimes by a client to get the maximum amount of mortgage possible however a good adviser will always tell the client that they are not prepared to make false statement on the application.

Go back to the Adviser and insist that he shows you a copy of the original application as submitted to the lender. You have every right to see it. Then you will know the extent of the 'fibs' this individual told.

Andy

taliwillow

Hello,

Thanks for you responses. When we finally moved into our house we were so pleased that we thought we would never have to deal with this man again. Unfortunately it looks like we may have to. The only reason we went with him rather than our usual advisor was that the lady who bought our house said she would only buy it if we went with the same advisor as she had always used. We think we see why now though. I think the main (and hopefully only) fib he told was that we were going to pay off about £20k of debts we had with the profit we made on our previous house. Unfortunately we didn't make any profit on our previous house (and he knew that was the case) so we still have most of that debt outstanding. My salary has now increased by £6k pa so I don't know what difference that would make. The only other option that I thought we may have is that we wait to move until the loans are paid which, if we keep saving the way we are, will hopefully be in 3 years but we don't really want to stay here this long (our neighbours who have only been here 1 month longer than us also want to move on so it's not just us!).

Andrew, do you think it's worth me seeking the advice of another financial advisor or would they have to report this to someone if I give them all the details? I do have a relative who is a property lawyer but I am not sure if legally she would have to take this further if I tell her what he did as it does seem that on all the legal documents it says that we sold our house for more than we actually did.

Thanks

Taliwillow

AndrewSmith

taliwillow wrote:

Andrew, do you think it's worth me seeking the advice of another financial advisor or would they have to report this to someone if I give them all the details?

What's done is done and cannot be changed. If you are not comfortable using this adviser again then don't feel beholden to them in any way. If you seek professional advice from another Adviser tell them what happened, but I do not see any reason for you to be worried about being involved in a legal battle with them. It is up to you whether you want to make a complaint.

No decent adviser will judge you personally for the actions of an irresponsible adviser as you describe.

I do have a relative who is a property lawyer but I am not sure if legally she would have to take this further if I tell her what he did as it does seem that on all the legal documents it says that we sold our house for more than we actually did.

This is the part that I am confused about. Can you explain this a bit more and say what actually happened and what circumstances led up to it?

It sounds to me as if the adviser manufactured a deposit for your original purchaser by inflating the purchase price of the property. What they then did was apply for a mortgage based on the inflated purchase price but stating that you would be gifting a deposit (called vendor deposit). It is a very messy way for someone to obtain what is basically 100% finance.

Personally I would advise that you never allow this adviser to darken your door again. It is becoming obvious that the adviser and your purchaser manufactured this scenario for their own benefit without giving a second thought to what the ramifications would be on your own situation.

Visit his office, demand to see a copy of the client file he holds on you immediately (thus not giving him time to remove any erronious documents). Then seek professional advice from a suitable qualified adviser who will give you the correct guidance with your best interests in mind, not theirs.
Andy

HelpWhereIcan

Hi taliwillow, I would echo Andrew's advice and reccommend that you ask the adviser for a copy of the application form to establish exactly what incorrect information the lender was givem.

There would then be nothing to stop you using your usual adviser to arrange the porting of th mortgage.

taliwillow wrote:

I think the main (and hopefully only) fib he told was that we were going to pay off about £20k of debts we had with the profit we made on our previous house. Unfortunately we didn't make any profit on our previous house (and he knew that was the case) so we still have most of that debt outstanding. My salary has now increased by £6k pa so I don't know what difference that would make.

I actually had a client in a similar position this year. I did not lie on the application form for him, but I found out when he wanted to move that he had not repaid a loan he had said he would do (the money was spent on home improvements and a holiday). This obviously would not look good on the porting application, but the lender did it anyway. I suppose they looked at it on the basis that it was going to be repaid this time and that you could always have taken out another loan at completion anyway. I am noteven sure what reference they made to the previous application, but it still went through. I suppose as long as the profit you are making on the house gives you enough to repay it, they will assume that you will do what you say. If you will not make the profit this time, I would look to see if the extra £6000 covers the loan repayments (it will cover up to £500 pm for some lenders - although affordability based lenders will be different) and make the loan affordable for you even with the loan kept on.

You will need to be able to expalin the 'fib' if you are questioned. I am not sure telling them that the advisr lied will help too much as you are expected to check the application form and details that are submitted to the lender (does not help if you are not given them I know, but the lender would expect you to demand to see a copy). They may also have doubts about your integrity if that is the approach you take. My customer was not asked, but I did warn him that he may have to explain that they decided (as they did) last minute to do a number of improvements which would be obvious if the lender wanted to inspect the property to check.

taliwillow wrote:

The only other option that I thought we may have is that we wait to move until the loans are paid which, if we keep saving the way we are, will hopefully be in 3 years but we don't really want to stay here this long (our neighbours who have only been here 1 month longer than us also want to move on so it's not just us!).

Depending on equity etc, you may be able to convert your current mortgage to a buy to let (if your lender does it), or interest only with consent to lease (if they don't) until your penalty is up. This would allow you to have the mortgage covered by the rent you receive and enable you to search the whole of the market to get a new lender for your new purchase, perhaps on let to buy. Once the penalty period is up, you will be able to sell the property without having to pay a penalty.

Renting out a house out is not an easy option, easy money or a sure fire winner. It invloves effort, cost and risk on your part and does not suit everyone. Property prices do not always go up and can fall as well as plummet, leaving you with negative equity on, potentially, two properties. It may however, give you an option that you might not have otherwise, and if you like it, it may end up being your first step into investment property.

Think very carefully and get advice before deciding (Usual stuff about a whole of market adviser etc). Do not use someone you don't trust and take it as a lesson hard learned - lying to a lender, intentionally or otherwise will normally just come back and bite you at some point. I am just sorry that it was the actions of an adviser in this case.

Shows why some of us end up upsetting certain types of people when we try to do our job honestly and with the client's best interests at heart - the fact that there are some dishonest advisers out there makes some people think we are all like that.

Hope all goes well and keep us informed.

taliwillow

Thanks again for your responses.

Andrew - In response to your question about vendor deposit, I think you may have hit the nail on the head with what he did. Does that mean it is legal then (It would mean I could breathe a sigh of relief it is? Basically when we got the paperwork re the selling of our house the sale price said £20k more than we were actually getting for it. When we questioned this we were told that that was just what the valuation came in at so thats how much the purchaser was getting a mortgage for so it was fine. We thought this a bit strange but figured we don't really know anything about mortgages and as there was a financial advisor, solicitor and experienced investor involved then it must be legal. Were we being naive? Then when everything had pretty much gone through the financial advisor told us that if any questions were asked that we should say we owed £20k to the purchaser which is why we had given that money back to her (although it never actually went into our bank account). Alarm bells did start to ring at this point but as this was about a week before we completed we felt it was too late to query and we may be in a big pile of poo if we did.
Is this the Vendor Deposit thing you mentioned? Does that mean we haven't inadvertently done anything illegal?

Thanks
Taliwillow