Mortgage porting - not sure if i understand correctly!

caut_1

Hi folks we are looking at moving house and have considered mortgage porting as an option (the mortgage is portable). However I cannot get my head around this is the following example correct.

We own house 1 and have 90,000 outstanding on the mortgage.

We are looking at house 2 which has a purchase price of 175,000.

Assuming we sell house 1 for rough value - 100,000

Does this mean that the 90,000 outstanding on the ported mortgage reduces house 2 cost price to 85,000, we then pay this from the sale of house 1, leaving us +15,000

Thanks in advance

The_J

No, view house 1 as a part of house 2. I.e for the first 100k value of House 2 you have your mortgage, you then need a mortgage for the rest (75k).

You will need to stay within the overall LTV limit though. I.e have at least another 7.5k to put down as a deposit.

holly_hobby

Hi Caut,

Portability - its important to note that this is in respect of the mortgage product only e.g fixed rate, tracker, etc, and not the actual amount of borrowings (os mge) itself.

Porting a rate essentially means that upon transfer, the mge product for its remaining term, will be applied to an equal amount of your new borrowings (subject to product & LTV criteria) i.e if currently 90k is held under the porting rate, thats the max borrowings it may be applied to under your new mge arrangements. Any additional borrowings that are required in excess of the qualifiying sum (in this case 90k), will be placed on a product chosen from the lenders current portfolio - so in effect you will have 2 different mge products running simultaneously for a period.

It should be noted, that the mge on your new property will also be treated as a completely new application by the lender for underwriting purposes i.e you will still have to meet the normal status and income requirements, on the whole advance reqd, as any new applicant would.

Porting of the rate is always at the discretion of the lender, and they can refuse to allow the port - meaning that the whole advance would be on an alternate rate chosen from their current range,, and you may be exposed to ERPs on the existing product.

Give them a call to see whats what, and then you can plan your move from there.

Hope this helps

Holly

StuC75

Depends who your mortgage with and the specific T&C's they have (with respect to any early repayment charges too -- I have an ongoing dispute with my mortgage company on this)..

Basics are that if you were to port, 90k would stay at the existing rate, and the additional 'pot' of borrowed (175 - 90 - Less the deposit put down **) would be at a new rate and subject to meeting lending criteria..

** Still need to keep within overall Loan To Value restrictions - i.e. cannot pocket the 10k 'equity' that you have; in fact would need additional funds to meet this (e.g. 17.5k deposit to keep to 90% LTV).