Porting mortgage with additional funds?

OnlyMe_08

Hi

Someone I was talking to mentioned they are thinking of moving homes in the next year or so.

Currently has £100K remaining balance to pay on current mortgage with around 17 years left. Now, my understanding is he could 'port' his current mortgage (which is around 1.25% over base) to the new home, which will still have the remaining term of the loan of 17 yrs, but could also request additional funds to facilitate new purchase?

So for example, if he sold current property for £200K, 100 would be used to close current mortgage account and the rest of the proceeds against new house of say £250K - he'll need to borrow a further £50K.

Are there any tools / calculators which would give an idea of how much his monthly repayments will be?

Finally, would it be worth the move, seeing rates may go up to around 6.5%?

Thanks for any advice.

GMS

Porting of a mortgage is not guaranteed. It simply means that the lender would welcome an application to move it, subject to meeting all criteria at the time.

Assuming your friend could port the mortgage it would be for the amount on current property only. Any additional borrowing would be at the rates available at the time of porting.

To work out repayments you would need to know the rate at which the additional borrowing would be.

As for whether or not it is worth it, this can only be answered by the person in question. Can they afford a rise in repayments? Do they need a bigger property? etc

OnlyMe_08

Thanks for clarifying GMS - I'm not too familiar with how mortgages work.

So assuming his current lender are prepared to port over the current mortgage, would he effectively need to take a second mortgage out to cover additional borrowing at present rates?

Is this the normal process for those seeking larger properties, as I don't see a more cost effective way to move house / mortgage?

GMS

OnlyMe_08 wrote: »

Thanks for clarifying GMS - I'm not too familiar with how mortgages work.

So assuming his current lender are prepared to port over the current mortgage, would he effectively need to take a second mortgage out to cover additional borrowing at present rates?

Is this the normal process for those seeking larger properties, as I don't see a more cost effective way to move house / mortgage?

If the lender agreed to port then the full amount of the remaining mortgage would transfer as it is, with any additional being on a sub account. A second mortgage is with a different lender generally so a sub account would be created by the current lender.

There may be other ways to do it. If your friend was worried about rate rises they may prefer to opt for a fixed rate for the full amount. If the current lender has competitive products then they may want to speak to them.

1.25% over base looks great now but will not be when rates rise to reported 5%. No idea how long this will take though so a gamble on the base +1.25 may be worth taking.

All depends on personal attitude to risk.