Would it be possible to port? All advice appreciated!

Stanley77

Hi everyone,

Before I speak to lender about porting, I would really like some advice on whether it is even worth it or they are likely to tell us to go away!

The long and short of it is, our circumstances have drastically changed since we bought our house and we really need to relocate. We bought with a 100% mortgage, which I know everyone here will frown upon, but it was the best thing for us at the time and we pay less in mortgage than we ever paid in rent and have overpaid where possible.

However, since house prices dipped this is now how it all pans out:

1) Bought house for £230k with 100% mortgage from Bradford and Bingley. Currently on SVR but this is a very competitive tracker rate for life of mortgage and we do not want to change it as we would pay much more

2) Currently owe £200k on mortgage

3) House probably worth £220-225k given sale prices on our road over last 6 months - although it was valued recently at over what we paid for it by three agents. Lender however using old Halifax figures that put it at £200k even though prices have climbed sharply in our area and we have improved the house greatly - but there's nothing we can do about their valuation and I accept that.

If we were able to move, the area we would move to would be cheaper and we would look to spend c.£200k.

So questions are:

How would porting work in the above circumstance? Given we probably have little or no equity at present according to B&B's estimations, would they refuse to port even if we could sell our current property for around £20k higher than their current valutation?

No idea how it all works so any advice appreciated

_Andy_

You wouldn't be able to port without a deposit.

Stanley77

thank you. So just to clarify, could the deposit come from the difference between the sale price of old house less the price of the new (potentially £20k, which would give a 10% deposit) or would it have to come directly from savings?

Also, in the case of porting - what level of deposit is required?

cheers

Thrugelmir

Bradford & Bingley is now part of NRAM. So no new mortgages available. You'd have to move lender.

If you are on a low cost mortgage. Take the opportunity to save money now.

Stanley77

Hi,

they won't lend more money but they will port mortgages for potentially the same or lesser value (I have already enquired in a general sense). My question is whether it would be financially feasible given the above situation.

We would love to stay here and save as much as possible, but our family circumstances have changed so we have no option but to relocate. If we can't port, we will have to rent this house out and rent a different one which would leave us much worse off.

Thrugelmir

Best to speak to them. As they'll treat each application on its merits. If you could reduce the mortgage in the process this may help your cause.

The port will be subject to their current lending criteria.

Is your mortgage interest only or repayment?

Stanley77

will do.

It's repayment and until we had a baby we have always made overpayments. The problem I am sure will be with their valuation which is now woefully short. You can't buy a house the size of ours in this area for £200k so not sure if it is even worth trying if they think that is what it is worth

Thrugelmir

With selling at £220k/£225k and buying at £200k. After factoring in moving costs is it worth it? In the short term use the money instead to reduce your current mortgage.

Stanley77

that's the problem though. It probably isn't worth it but we absolutely have no choice but to relocate with work or we end up with just the one income and my partner unemployed with little prospect of another job.

if we rent this house out, the income probably won't cover our mortgage and with a young family and having to move to another part of the country, we would have to pay a management company to look after it for us which is another big expense - plus rent on another house.

Feasibly, the most sensible option would be to see if we could port and buy a cheaper property but I am just not sure if that could happen given our circumstances. Catch 22...

MissMoneypenny

Stanley77 wrote: »

if we rent this house out, the income probably won't cover our mortgage and with a young family and having to move to another part of the country, we would have to pay a management company to look after it for us which is another big expense - plus rent on another house.

Plus you have to obtain Consent to Let from your mortgage lender and there is also Universal Credits to think of which start to come in in 2013, as there will be a capital limit of 16k which includes savings, investments and equity in houses that aren't lived in by the claimant.

From what I have read on the benefits board, Universal Credits is going to replace the following income based welfare payments :-
Child Tax Credits;
Working Tax Credits;
income based Job Seekers;
income based ESA (ESA is replacing Incapacity Benefit);
Housing Benefit/LHA.

Contribution based Job Seekers only last for 6 months. Contribution based ESA only lasts for 12 months (this new rule starts in 2012 and is for everyone, unless their medical tests put them in the Support group)

New rules for those who claim working tax credit now, based on them earning at least the minimum wage per hour and all those who claim Universal Credit will be subject to conditions (such as the ones the job seekers have now).

Talk also of putting a charge on the property of those who claim Support for Mortgage Interest.

Stanley77

I had no idea about this either. not that the universal credits will affect us much, but needing consent from our lender to let could be a problem.

The whole thing is making me feel sick.