Porting a mortgage

TJ83

Hi, I own a house with an ex which we are likely to sell for approximately 90k but the mortgage is £110k. Please can someone advise what would happen if I am to Port this mortgage to a cheaper property for around 90k?

kingstreet

On completion day, you'll need to put £20k cash into the sale to be able to repay the mortgage and provide unencumbered title to the buyer. Otherwise, you'll need approval from the lender to allow completion to take place without full repayment of the negative equity. This is both unusual and unlikely to be possible

During the purchase of your new property, you'll need to apply to your lender for a new mortgage, satisfying its requirements for affordability and deposit. Once the application is approved, it will allow you to transfer the rate from your old mortgage to the new one on the day completion takes place.

Many people believe porting is the ability to transfer a mortgage from one property to another. It isn't. It's the ability to transfer a rate from one mortgage to another, subject to the usual checks and adherence to the lender's criteria.

Strapped

It also means that you should check carefully what the T&Cs are if you are on a fixed rate or other mortgage which has early repayment charges. You may be liable for ERCs on part of the amount (eg the £20k which you are not porting).

Richard_Webster

It is very unlikely that your lender will allow you even to "port" £90K of the £110K to the property you are buying because the new loan will have to comply with lender's current criteria and 90% is the effective maximum now available (and your lender may not even offer that). So 90% of £90K is £81K - so you would need to find £20K to pay off loan on house being sold and a further £9K to put down on that being purchased plus costs, estate agents fees, ERC, etc, etc.....

Richard_Webster

It is very unlikely that your lender will allow you even to "port" £90K of the £110K to the property you are buying because the new loan will have to comply with lender's current criteria and 90% is the effective maximum now available (and your lender may not even offer that). So 90% of £90K is £81K - so you would need to find £20K to pay off loan on house being sold and a further £9K to put down on that being purchased plus costs, estate agents fees, ERC, etc, etc.....