Confused re porting Nationwide Mortgage

rhionm

Could someone please explain to me how porting a Nationwide mortgage works? How would it work in this example as I just can’t get my head around it!!

Outstanding Mortgage - £100,000
Selling current property for £125,000
Buying new property for £180,000

Would we pay the outstanding mortgage off first and just port the terms or would the outstanding mortgage come with us to the new property? How would you then calculate the deposit needed?

Many thanks

Jimbo1976

You would basically move your £100,000 old mortgage to the new property and then top it up on the new home.

At present you have £25,000 of equity from the same, I guess you will pay about 1.5% for estate agency fees on your current home so thats about £2,000 if you take into account VAT. So you are down to £23,000. Stamp duty on the new home is £1,800 so thats another £2,000 or so gone so you are down to £21,000. In terms of your new mortgage you really need to try to put in a deposit of at least 10% otherwise the rate will be awful. Whether you can port your old mortgage to your new property will depend on what sort of rate you are on and if there are any loan to value restrictions. Its probably worth checking with Nationwide to see

rhionm

Thanks a lot for the info, when you refer to 10% deposit I presume it would be 10% of the new property value (£18,000)?

Thanks

kingstreet

I'm going to disagree I'm afraid. You can't transfer a mortgage from one property to another.

On completion day, your current mortgage is paid off completely. As you are selling/buying, you apply for a whole new mortgage for the property you wish to buy and if allowed, you "port" the rate from your old mortgage to the first part of your new one. Anything over and above is offered on one of the lender's current products.

You end up with a mortgage account made up of two sub-accounts.

For example, in your case, you might have a new mortgage of £160k, based on you buying for £180k and putting down £20k of your £25k equity. The first sub-account would be £100k at your present rate, with the other sub account for £60k at a new rate being offered today.

You must remember the new mortgage is subject to status and adherence to lender criteria and valuation TODAY. There is no allowance for any changes in your circumstances between taking out your last mortgage and this one. Being able to port does not guarantee you a new mortgage if you have poor credit, lower income or the property value isn't as high as you expected.

rhionm

Thanks a lot for the information, really helpfull

Thrugelmir

rhionm wrote: »

Thanks a lot for the info, when you refer to 10% deposit I presume it would be 10% of the new property value (£18,000)?

Thanks

How much are you wishing to borrow? As this will influence the NW's decision as to whether to allow you to port.

rhionm

I think we could get the property for around £175k, would transfer the £100k outstanding and would put a £20k deposit so additional borrowing would be around the £55k mark I think.