Any sensible advise for 2nd home mortgage

charsi16

Hi,
I had previously posted a thread to get some advise from regulars and elders!!! lol..but wasnt able to clarify what was in my mind in terms of calculations and pros and cons..possibly because I wasnt very clear with my queries.

It is a bit more clear in my head what I am asking...so here goes.

Due to some unforseen reasons ( job related)I am having to purchase a property as a new residence in Wales. My previous prop which I bought in England in 2006 was on a mortgage ..actually is on a mortgage. The value of the prop currently ( as per asking prices in the same estate) is between 249- 265K. I have a balance mortgage of 140K on the property, on SVR 3.99%

Now the new property I am going to buy in Wales is on for 340K, say if I go the asking price, i.e 340K.

1/ Can I ask the previous mortgage provider to port my existing mortgage to the new property? Will it be sensible?

2/ Does that mean, I will have a mortgage of 140k on SVR 3.99% and the rest (340k- 110K odd equity) 230K as a new mortgage, say on a fixed rate of 4.19 %? Is that financially sensible?Or should I leave the other mortgage ( england prop)as it is and apply for a new mortgage of 340K altogethar? at 4.19%?

3/ What will be the deposit the mortgage company take? is the equity accepted as deposit i.e 110K? or that they will ask for a further deposit of say 15-20% on the new mortgage of 230K?

I am sorry, I have spoken to the call centre of my current provider, he has a strong accent and confuses me more than helps me clarify things. All i can understand is that he said that the bank will let me port!!

Please help. This will help us make a decision quicker ...Many thanks in advance

Thrugelmir

1. Totally your own choice whether to remain on the SVR or fix. As the SVR is currently 3.99%, the unknown factor is will your lender mirror increases in BOE base. Currently the SVR is 3.49% above base possibly this could narrow.

2. Purchase price £340k less equity of £110k. So £230k to finance. You could port existing mortgage of £140k. This leaves 90k to finance with a new mortgage product. In effect your mortgage will consist of 2 seperate sub accounts.

3. The mortgage company will not require a deposit as such. The equity from the sale of your old property will fund the balance of the purchase price.

If you intend purchasing a second house then you'll have to raise the capital to fund the purchase above that the mortgage company is prepared to advance.

charsi16

Thanks for your help.

What I meant was that I dont want to rid my older property in england. I want to keep both, in case I have to move back in 4-5 years.

So the question of selling the first house doesnt arise. What I want to know is that, so as to remain with the current lender, can I port my mortgage ..and continue to pay SVR of 3.99% on 140K? and would it be possible to use the equity of 110K odd towards a deposit for the new property in Wales which has a asking price of 340K.
And would that mean I would need to take out a new mortgage product of 340k- 110k =230K at whatever rate the mortgage provider allows me? So in effect is there any use of the equity in my previous prop that i could use towards the new purchase?

I intend to rent out the previous property while I live in Wales.

I hope I am asking a reasonable query? is this possible at all?
The mortgage provider said "you could port" and "we will give you permission to rent"..other than that he only confused me!

Thrugelmir

If you port your existing mortgage to the new property, then the mortgage on the old property will be a different product at current rates of interest. The mortgage can only be on one property.

You would need to remortgage the old property up to a 100% of value to release the equity. Its not possible to assign equity to another property as a deposit. The deposit on the new property will need to be paid in cash ( ie difference between mortgage and purchase price).

Who is your lender? Whilst they may give Consent to Let you may incur additional charges to do so.

Are you sure renting your old property will fund the mortgage and all other costs?

charsi16

Its scottish widows.

So u mean that the balance of 140k will be at a different rate? when the mortgage provider is giving permission to rent ?

The rental market suggests that I shall get anywhere between 800-875 PCM for the old property when I put it on rent .

And ..what is porting then..is this not possible as the scenario I have mentioned?>

Thrugelmir

Porting is the transfer of your existing mortgage terms and conditions.

Its not the transfer of the mortgage itself. As a mortgage is really just a loan, the mortgage being the charge placed on the security, i.e. your house.

If you port your mortgage to the new property. Then your lender can set the t&c's of the new borrowing facility on your existing one.

How do you intend raising the deposit on the new property?

charsi16

Thanks again.

I have about 100k as an offset.

Could you relook at my situation and query and see what would you advise given the info.

I was told by a colleague that since I have paid of 110 of my older property, I could ask the same lender to port the balance to new property, and added mortgage of the balance on new T&CS and rate..so having two mortgages on the same property. So the money paid off from the first property cannot be used as a deposit for further guarantee or deposit?

.. given I want to keep the english property which has a balance of 140k at 3.99% left over 21 years, the property being valued at say 250k. And then purchase this new property in Wales which has an asking price of 340K. I also have 100k which I was hoping to use as deposit and stamp duties etc etc.
Am I being thick or am I asking of something that is not possible at all...What would you do if you were in my situation, Mr Thrugelmir..help please

getmore4less

Porting the mortgage does not generate any cash.

If you buy the place in Wales you need to raise £340k in cash

With £100k cash that means you need £240k extra.

Along with the £140k you allready have borrowed you need to borrow £380k total

What's you income? less than £80k forget it.

If you rent out the old place that will lower the income requirements.

charsi16

The last mortgage is 140 k balance, I have 100k in offset( which i was saving ). If the property is rented I shall get 850pcm which should take care of the monthly payments on that property.

The new property is 340, I could use the 100 k towards securing a new mortgage.

Our joint income is over 120k per annum, possibly higher.

What I would like is , advise from people is that if they were in my position ( I didnt want to move and buy a new property but am doing it as I rather pay a mortgage than pay rent for 4 years). If I didnt have to move I could have freed my english house in next 2 years!

What is the best and cheapest way to go ahead?
Should I leave the english property to let. And the rental pay the monthly payments towards the 140k balance?
And get a new 340K mortgage using the deposit ?

Or consolidate everything by porting and further borrowing?

getmore4less

First check if the lender will consent to let the existing loan on the property.

If they won't then you will need a BTL mortage so price that up

£850pm on £250k is gross yield 4% so it will be hard to make any money or even break even by letting this place

If they concent to let that will that gives options.. port and BTL or

A new £240k loan with £100k deposit is 71% LTV which will get you OK rates product for the new place.


£340k seems a lot for wales can't you find a decent place for less?

charsi16

The current lender will give permission to let.
It is a 25k property, balance left 140k, so if the rent comes in regularly it will be paying my mortgage payments on the balance. I dont think I am looking at making a profit from there, hopefully in 4 years time I could sell the property.

What should I do for the new property then? Find a new lender and use deposit to get a decent rate? at say 75% LTV.

So basically, the payments I have made uptil now on the english property around 110k cannot be of any use for me at the mo? in so as to secure the second mortgage?