Porting - how does it work?

choccywoccy

Im confused, please someone explain this to me in simple terms!

We are selling our house - mortgage is with Santander and we have about £100,000 equity - loan is for £130,000 interest only.

We will sell for about £220,000 if we are lucky....

Looking to relocate so i "assumed" I could just transfer ther mortgage for a house around the same value....am I wrong? We will be starting a new business at the same time so circumstances change...will the bank need to know this? Is it a new application or just a straightforward "swap"? We ran into arrears 6 months ago with Santander and this has been now paid off and resloved...but could go against us in a "new" application?

If so ... then is there a real possibility that we wont be approved for a mortgage at all???!! Then we would have to rent and our equity would be swallowed up with costs - our mortgage is about £475 a month but rental is about £700 - I need to know what to do. Any advice helpful thanks..:o

Jimbo1976

Any new mortgage will be underwritten under today's tougher underwriting criteria and will depend on your current income. If you plan to start a new business, you should disclose this however if you do so you will severely descrease your chances of getting a mortgage.

It is a new application. The arrears will make it harder for you to get a mortgage but you have a decent amount of equity which will count in your favour. You should speak to a broker as they will be able to give you better advice in view of this credit issue.

If you decide to rent, you need to go to Santander and ask for "consent to let". It may increase the rate it charges you for your mortgage if it agrees.

choccywoccy

Thanks Jimbo1976 - It is a bit clearer now... I should have said more clearly - I didnt think about renting the property out instead of selling it... I meant that if we wernt granted a new mortgage by Santander then we would have to rent our new home instead of buying, which I didnt want to do. Will we have to pay an early repayment charge if they refuse us?

Jimbo1976

If you sell your home and can't take out a mortgage on the new property with Santander, then if you are paying a rate which has an early repayment charge then, yes you would have to pay.

You can normally pay off 10% with no penalty so you would be charged an ERC on the extra

choccywoccy

Ah ok... well - heres another question then... IF we dont get another mortgage then we will have £100,000 (ish) of equity..... we have a second home rented out which is only worth about £120,000... so we could effectivly pay that off and use the rental income we currently get for it to help us pay our own rent if we have to do that ( the rental house we own is far too small for our family of 6!) but would we then have an early repayment charge on that? ( is is advisable to do this even?) It is with Birmingham Midshires..

Jimbo1976

You could do that but if you repay the loan then all of the rental will be taxable. Depending on your tax status, that may make it less attractive. What rent do you get on the let property compared with what you could get if you put the £100,000 in a savings account.

jamesd

choccywoccy wrote: »

We will be starting a new business at the same time so circumstances change

You would have a shockingly low chance of being accepted. Discuss with a mortgage broker before you change job type and move while still in the same job if at all possible, else expect big trouble. Requirements for three years of business accounts are the sort of thing you should expect and can't deliver.

choccywoccy

Jimbo1976 wrote: »

You could do that but if you repay the loan then all of the rental will be taxable. Depending on your tax status, that may make it less attractive. What rent do you get on the let property compared with what you could get if you put the £100,000 in a savings account.

rental is £550pcm and mortgage about £280 so we get the difference....not thought about tax! (we have an accountant right now so he does deal with that stuff) hmm lots to think about. We just need somewhere to live first and foremost...

so I could move house BEFORE we sell the business (which is likely to hapen anyway) and that might be acceptable to Santander....? even though the new house will be over 200 miles away... my husband would have to stay on here until the current business sells anyway.. I was going to move ahead of him to get the kids settled into schools etc.

jamesd

Yes, that's more stable so it's much more likely to be acceptable.