Transferring/Porting a Mortgage

geoffae

I am somewhat confused over the term 'porting', the wife and I placed our house on the market and received an offer within 6 days, consequently we made an offer on a property we wished to purchase, this was valued more than our current property.

No problem, house sale + mortgage transfer + savings was easily doable.

I contacted the mortgage lender prior before starting the ball rolling and yes we could transfer/port our mortgage and currently we have an AIP matching our current mortgage value.

Now, I naively assumed that what would happen is the full sale value (185,000) plus the mortgage 43,000 would be used toward the new purchase with us adding 54,500 of our savings would total 282,500 the offer we made.

Over the weekend a thought crossed my mind that I had got this horribly wrong and that the current mortgage would have to be paid out of the sale of 185,000 leaving us with just 142,000 plus a 43,000 mortgage leaving us to find 97,500.

If this is the case and I have got this wrong we shall need to find another 43,000 the equivalent of the original mortgage, so how has/does the mortgage transfer.

I am really having trouble understanding this as my initial conversation with the lender lead me to believe that we would 'in a sense' be transferring the mortgage to a property which was worth more and therefore has a much higher equity built in.

Can someone help us out with this, because the wife and I are now even more confused than when we started.

Thanks, Geoff.

holly_hobby

Porting relates to the mortgage product, fixed, discount, etc - which will be applied to an equal amount of borrowings, that it was held on when you redeemed your existing mge.

You will be assessed as new borrower for the new mortgage, which means that your incomes will be verified that they are sufficient to service your total mge on your new home, and you will of course be credit checked re any adverse credit etc.

So as I say, porting relates to the mortgage PRODUCT, not the borrowings themselves.

Hope this helps

Holly

kingstreet

You're applying for a whole new mortgage for the amount you need. You may be able to port your old rate to the first part of the new mortgage.

On completion day, your old mortgage is repaid from the sale proceeds of your current property. Your solicitor takes the residual funds, adds them to any cash you are putting in and finally adds that to the new mortgage funds which he's ordered ready.

The completion monies for the new property are then sent to the vendor's solicitor to enable completion of your purchase.

It appears you will be porting the rate from the old mortgage to the first £43,000 of your new one. The additional money you are borrowing will be based on one of the lender's new products of your choice.

So, you're selling for £185k and paying off a £43k mortgage. Your solicitor will then have £142k towards your new purchase. If you're adding cash to the value of £54.5k and buying for £282.5k, the new mortgage will need to be £86k (£282.5k - (£142k + £54.5k)).

The calculation presumes you are paying the fees and stamp duty from your own resources. If the £54.5k includes these items, the new mortgage will need to be higher.

Finally, a mortgage of £86k means the ported rate on £43k and a new product for the £43k new borrowings.

geoffae

Holly, thanks for reply....so you have confirmed my weekend fears.....that we shall have to use all our savings instead of having something left over for improvements.
We have an AIP in place, it's just the concept/understanding was incorrect having assumed that the value would be transferred, now I understand why we have an AIP and the only thing you gain is the rate and any other benefits etc.

Geoff

geoffae

Thanks Kingstreet, you've confirmed what we have concluded ourselves over the weekend, we have £100k to put toward the new property, so £142k + £43k + £97.5k = £282.5k this would leave us with £2.5k from our own £100k, which would leave us to find £12.5k for legal fees etc, as I have estimated fees and costs around £15k.

Or increase our borrowing slightly with say a £20k top up mortgage if possible.

Geoff

kingstreet

geoffae wrote: »

Thanks Kingstreet, you've confirmed what we have concluded ourselves over the weekend, we have £100k to put toward the new property, so £142k + £43k + £97.5k = £282.5k this would leave us with £2.5k from our own £100k, which would leave us to find £12.5k for legal fees etc, as I have estimated fees and costs around £15k.

Or increase our borrowing slightly with say a £20k top up mortgage if possible.

Geoff

Let's call it a new mortgage for £63,000, eh?

geoffae

kingstreet wrote: »

Let's call it a new mortgage for £63,000, eh?

Well we would happily settle for 60k......

dimbo61

What you need to look at is the BIG picture !
now what is the existing rate you are porting over ?
I guess if you already have £140K equity in your current property and £55K in savings then your LTV for the new home is very good and you can get the best deals on the market.
Another poster on this board talks about Santander/HSBC offering 2.99% fixed for 5 years
Use "whathecost" to work out the figures and check if having 2 different parts to a mortgage is better than a new deal altogether.

geoffae

dimbo61 wrote: »

What you need to look at is the BIG picture !
now what is the existing rate you are porting over ?
I guess if you already have £140K equity in your current property and £55K in savings then your LTV for the new home is very good and you can get the best deals on the market.
Another poster on this board talks about Santander/HSBC offering 2.99% fixed for 5 years
Use "whathecost" to work out the figures and check if having 2 different parts to a mortgage is better than a new deal altogether.

Hi,

Existing rate we would be porting is 2.5%, current equity is as you say around £140k we have savings of £100k, the new property is £282.5k + around £15k costs, hence a mortgage requirement of £60k would be a better option.

However, I'm not sure what you mean by having 2 different parts to a mortgage is better than a new deal.

Have spoken to a mortgage advisor at the estate agents we are selling through, he's looking at a NatWest mortgage at 3.19%....ok we haven't been to see him....yet......and I appreciate there are others out there with better deals.

R_P_W

You have potentially two options...

1. Sell you house and buy the new one. Stay with Nationwide as your lender and (subject to their agreement) port the balance of your existing mortgage over @2.5%. Lets call this mortgage 1. Sounds like you need a bit more on top which you will need to borrow from Nationwide - but this will be at a new rate - call wthis mortgage 2.

2. Don't port your mortageg from Nationwide at all and get a new mortgage for the full amount you need to borrow. You wont get anything at 2.5% though.

Myself and my wife has just relocated to London from the Midlands. We we able to port her current nationwide borrowing @2.5% but then we had to borrow more at a higher rate. Overall Nationwide wouldnt have been lender of choice without having that 2.5% to port - but overall it represents the best deal we had available.

geoffae

R_P_W wrote: »

You have potentially two options...

1. Sell you house and buy the new one. Stay with Nationwide as your lender and (subject to their agreement) port the balance of your existing mortgage over @2.5%. Lets call this mortgage 1. Sounds like you need a bit more on top which you will need to borrow from Nationwide - but this will be at a new rate - call wthis mortgage 2.

2. Don't port your mortageg from Nationwide at all and get a new mortgage for the full amount you need to borrow. You wont get anything at 2.5% though.

Myself and my wife has just relocated to London from the Midlands. We we able to port her current nationwide borrowing @2.5% but then we had to borrow more at a higher rate. Overall Nationwide wouldnt have been lender of choice without having that 2.5% to port - but overall it represents the best deal we had available.

Thanks for that, I guessed that is what we may have to do....port then borrow the addition.

How long did it take for you to get a decision from Nationwide, ours is with C&G and Ok it's only been a few days, but I would have expected a decision within 48 hours.....or is that wishful thinking?