Mortgage porting question.........

NDI

We have just sold our house for £242,000 - £96,000 of this is equity which we will use as a deposit and to pay associated housemoving costs (we have just had an offer of £325,000 accepted on a new property). Our current Woolwich mortgage is approx £146,000 (2.38% tracker) and we have been advised that we can port this. Our new borrowings will total £250,000 (£146,000 ported, £104,000 new product). Our mortgage broker is saying that we have to pick a product from what is currently available through the Woolwich and that 3.69% fixed for 2 years is the best she can find - I'm not sure about this as I can see cheaper rates on the internet. I am also confused as to how 'porting' works. Do we have to have two seperate mortgages running side by side which start/end at different times? Will this not be a nightmare/costly when it comes to remortgaging ie 2 remortgages and 2 lots of fees within 6 months when it comes to 2014? I'm wondering whether we should pay the 1% ERC and start from scratch with a brand new mortgage for £250,000. When we first approached our broker to ask whether we would be able to borrow that amount, she got a Decision in Principle from the Woolwich which apparently left a footprint on our credit history - not sure if that affects anything/matters? Is there any other way to tackle this? I'd be very grateful for any advice or suggestions. Thanks in anticipation.

kingstreet

You'll have one mortgage with two sub accounts, one for the original rate you're porting to the first part of the new mortgage and one for the new rate you are taking on the increased borrowing.

You will have to wait until both portions fall out of penalty before you can think of remortgaging, but choosing a new product which gets you as close as possible to the expiry date of any penalty on the first part of the mortgage is a good idea.

If you can find a better deal, you'll leave Woolwich altogether and have the whole new mortgage on a new offer with a new lender. If that means paying a penalty you're going to have to work out if that makes sense for you. A single credit search should make no difference to moving to another lender, should you choose to do so.

Wh05apk

Your existing deal @ 2.38% is very good, particularly at the new LTV of 77%, is it a lifetime tracker? if so you probably wouldn't want to lose it, given current rates, I can't see a 3.69% 2 year fixed on their site either, if you have a penalty to come off the deal, it would be unlikely that you could save elsewhere, otherwise, if you could reduce your LTV to 75% you may get a slightly better deal elsewhere.

Ems112

We are in a similar position to you. We have just exchanged contracts and are just about to move house. We ported our existing mortgage with Woolwich (Lifetime BBBR Tracker +0.74% with no ERC) and then borrowed the balance (£30,000) at a 2 yr fix. When I spoke to the Woolwich I was told you have two account numbers for your mortgage (one for the ported rate and the other for the new rate). I presume when the 2yr fix ends you can remortgage that portion of the mortgage to a different product with them or, alternatively, just revert to the follow on rate (currently BBBR + 3.49%). Our long term plan (hopefully!) is following the expiry of the 2 yr fix pay off using savings all but say £100 of that portion of the mortgage and then carry on with the lifetime tracker. I suspect there will be two lots of mortgage redemption charges/closing fee/deeds release fee at the end of the mortgage (£275 per mortgage) but not entirely sure.

Wh05apk

There will only be one lot of redemption fees.