Porting a bad rate

HelenE

Hi

I have been a Halifax customer with various mortgage products with them for over 4 years now. Last time we remortgaged in 2009 we were told we had a 110% LTV (without them even coming to value our property) and were offered a high fixed rate product. At the time we thought we were lucky to get any fixed rate (although with hindsight we would have been better off on the SVR!) so we signed up for it.

We now want to move house and will be in a much better position with an 85% LTV. However, Halifax are saying that I need to port my existing high rate or pay over £10k in ERC and are refusing to reassess our current situation - we both earn more, we have excellent credit ratings, we will have more equity in the house, we have never missed a payment, and we want to borrow more. They are telling me that I am stuck with the bad rate I signed up to in 2009. What really sticks in my throat is that the other terms of the mortgage, namely that it was interest only, cannot remain interest only and must switch to capital and interest. I have been told that is because "things change". I sympathise with that view and I am simply asking that they apply the same logic and re-assess our new position, new home and new application on the same basis. Apparently it doesn't work like that and they can cherry pick the bits of the mortgage they want to port across, whilst leaving what they don't like behind. This seems horribly unfair to me.

If anyone has any advice I would love to hear from you as I'm getting no-where fast banging my head against a Halifax brick wall ethos of "computer says no" which is driving my mad!!

Thanks in advance.

opinions4u

You move the rate or you pay the penalty.

No other choice.

It's not "computer says no". It's "accountant says no". They've borrowed the money that they lent you and are committed to continue paying whatever rate they took their loan at long after you've repaid the debt.

Sorry.

HelenE

I understand that but lets not kid ourselves, they have borrowed that money at an interbank lending rate which is considerably lower than the rate they charge their customers! I am not asking to walk away and leave them high and dry, simply that the "accountant" looks at the risk profile as at today and not as at 2009. Surely its about business retention and its very short sighted of them to act as they are as I will simply take my business elsewhere as soon as I can do once my ERC fall away.

kingstreet

The problems is porting isn't a simple process of transferring a mortgage like some people think.

You are paying off the existing mortgage and taking out a new one. The new mortgage is therefore subject to all the conditions which apply today, like a high deposit and interest-only for those with a separate repayment vehicle only.

Porting a rate to this new mortgage is pretty much as it's always been. You can move the old rate to avoid paying early repayment penalties to permit you to move house at a lower cost.

If you didn't have the porting option, you'd have to pay the ERP whether you were moving to a new lender, or staying with Halifax.

HelenE

It doesn't permit me to move house at a lower cost though does it.... it permits me to remain burdened with a high cost mortgage which isn't reflective of the current risks they are assuming.

I am happy for the mortgage to be subject to all the conditions which apply today and I'm more than happy for them to look at my new application and come up with a rate which reflects the risk they are assuming. What seems wrong is that they carry over the high rate because it suits them even though the risk profile to them is less but then they say its subject to everything which applies today where it suits them.

kingstreet

HelenE wrote: »

It doesn't permit me to move house at a lower cost though does it.... it permits me to remain burdened with a high cost mortgage which isn't reflective of the current risks they are assuming.

I am happy for the mortgage to be subject to all the conditions which apply today and I'm more than happy for them to look at my new application and come up with a rate which reflects the risk they are assuming. What seems wrong is that they carry over the high rate because it suits them even though the risk profile to them is less but then they say its subject to everything which applies today where it suits them.

You could purchase a cheaper property with a lower mortgage and pay a proportionate penalty after the porting of as much of the old rate as you need.

The rate doesn't reflect the new risk. It can't do that. They can't work out a new rate for you because you need to transfer the old one to prevent the early repayment penalty. When Halifax offered the fix you chose to accept, they entered into swap arrangements with other institutions who were prepared to guarantee those funds at a particular rate for a particular period. To get out of that commitment, Halifax has to pay a penalty which they pass on to you.

This is the perennial problem of choosing a fix at the wrong time. As I said, the porting issue is just muddying the waters. If you didn't have the porting option you'd stay where you were, or face the penalty to move to a new lender or new Halifax deal and that would be on today's terms and conditions.

I understand your frustration and your need to vent. Feel free.

However, what we do try to do here is offer factual, constructive help and information where we can.

dimbo61

How long has the fix left to run ? can you put off moving until then and overpay as much as possible to reduce LTV

opinions4u

HelenE wrote: »

I understand that but lets not kid ourselves, they have borrowed that money at an interbank lending rate which is considerably lower than the rate they charge their customers!

It won't have been a LIBOR deal. It will be at a mark up over and above swap rates. Much of the wholesale funding of fixed rate mortgages pre-Credit Crunch gave lenders only half the net interest margin they would usually expect to receive on a mortgage. Deals for negative equity situations since the Credit Crunch have also been narrow margin.

I am not asking to walk away and leave them high and dry, simply that the "accountant" looks at the risk profile as at today and not as at 2009.

It's not the risk profile that's in question. It's straight forward P&L. Redeeming early totally exposes the bank to a bad deal, hence the ERC.

Surely its about business retention and its very short sighted of them to act as they are as I will simply take my business elsewhere as soon as I can do once my ERC fall away.

LBG, which owns Halifax, is pursuing a strategy of asset reduction. They want fewer loans and mortgages and more savings as they unwind the mess HBOS Corporate created ahead of the Credit Crunch. In other words, it isn't about retaining mortgage customers. While you won't read it in the glossy brochures, they really want to lose some mortgage customers.