Portability of mortgages

madmish00

Bit long winded but here goes. We were due to exchange and complete on our sale and purchase this week but someone at the bottom of the chain pulled out.

We still want to proceed with the purchase and are looking at how viable it would be to keep our current house for the meantime (our buyer is still interested but there ended up being 3 more in the chain so she is not in a position to buy)

We currently have £79,900 outstanding on a lifetime tracker with Nationwide at 0.18% above base rate (though with a floor which is currently applied at 2% - so current rate 2.18%) Our monthly payments are £341

The property we were buying is £175,000 and we were going to lend £140,000. However to proceed without the equity released from our current home we would now need to lend up to the 85% LTV which is £148,750

I earn £30k pa and my partner earns £20kpa basic plus excellent bonuses (P60 from this year shows £37k) so I think on affordability we are OK.

But we don't intend to keep our current home long term - it is just a means to an end to get the house we really want (and have already spend about £1200 on searches/surveys/fees etc) so we don't really want to lose our great mortgage rate by taking out a new mortgage for the full amount and then redeeming the other when we do sell.

Is it possible for us to remortgage our current house onto a fixed rate and port the tracker onto the new property? Obviously additional borrowing would be stuck with Nationwide but long term I think this would be cheaper (would be able to make overpayments aswell once capital released from selling current house)

Or would it be better to take out a new mortgage on a shorter term low rate tracker/discount (i.e N&P BS currently have 2yr discount at 2.59%) and then remortgage after this.

Our prospective buyer is willing to rent our current house and the rental income would cover the mortgage payment. (Though I am reluctant to rent it to them as they may change their mind about buying it once they have lived in it for a few months and discovered any flaws!)

Are there any other options I could consider? We really don't want to lose out on this house as it is our dream house and we would probably not move again.

kingstreet

You can only port the product if the old mortgage is ending. All I can suggest is you contact Nationwide and see what they say. It's likely they will take the cost of the old mortgage off your affordability as you could be stuck with paying both at once.

The new mortgage will then have to be on a new product, based on the 85% advance you now need.

madmish00

Thanks for your reply.

If we can't port the existing mortgage we would look elsewhere to be honest because Nationwide's 85% rates are pretty high compared to elsewhere. I do begrudge paying a 1.5% premium on our current mortgage to rent it aswell as having to take a higher rate on the new mortgage!

Having run through affordability on a couple of lender's sites and included the current mortgage in outgoings we should be OK. ING Direct would still lend £199k even factoring in the £341 mortgage payment.

May have to find myself a whole of market broker and have a chat!

kingstreet

madmish00 wrote: »

Thanks for your reply.

If we can't port the existing mortgage we would look elsewhere to be honest because Nationwide's 85% rates are pretty high compared to elsewhere. I do begrudge paying a 1.5% premium on our current mortgage to rent it aswell as having to take a higher rate on the new mortgage!

Having run through affordability on a couple of lender's sites and included the current mortgage in outgoings we should be OK. ING Direct would still lend £199k even factoring in the £341 mortgage payment.

May have to find myself a whole of market broker and have a chat!

The latter is probably a good idea. They'd need to check the new lender would take the mortgage payment at the current rate, and not apply some arbitrary factor to it to ensure you could still afford in the future.

Last one I did like this, I did with the Nottingham BS. They took the monthly payments off the borrowers income, like a credit agreement, and then worked out affordability for the new one. The only proviso was they would never give consent to let on the new one, in case my client was trying to get a BTL through the back door.

Caroline73_2

I'm confused, who are you lending £140000 to?

EclipsedMind

Caroline73 wrote: »

I'm confused, who are you lending £140000 to?

He means that he will be borrowing 140k i.e. (new lending) on the new property whilost retaining the original loan on his current house.

I would definitely shop around and see what you can get as you definitely can't port the NW loan until you redeem it. I seem to recall that you can port it for a while after redemption tho - not sure how that would play out in the scenario you discussed.

As for the renting out and potential new owner finding flaws - surely anything serious he will get you to fix while you are the landlord :P


EM

madmish00

As for the renting out and potential new owner finding flaws - surely anything serious he will get you to fix while you are the landlord :P

Unfortunately I don't even think as a landlord I would be able to fix the noisy neighbours that have been bugging me for the last 5 years!