Confused! Moving mortgage question

indiegrrl

Hi I'm a second time house buyer and would really appreciate advice, having had two v confusing talks with mortgage advisor at Nationwide.

We have received an offer on our home of 205k. We have a mortgage on this house of 17k, plus an overpayment reserve (OPR) of 41k. We are hoping to buy our new home for 340k. We are on a good deal with Nationwide and would like to port this mortgage, and then make up the shortfall with a new Nationwide product.
Nationwide is prepared to do this. Their man proposed the following: they would need to pay us back our OPR to enable us to have the largest possible mortgage to port (this makes sense as our current mortgage is a very good deal). We would have a mortgage then of 59k which we could then port to our new home. After agents' fees we will clear 200k on our current house. 200k plus mortgage of 59k leaves a shortfall of 81k which Nationwide would be prepared to lend us on a new deal that suits us well.
So far so great. But: to my way of thinking, we owe Nationwide 59k on our current home - the 17k outstanding plus the 41k we will be getting back from them as OPR. don't we need to pay this back out of the 200k we will get for our house? I just don't understand tho I've spoken to this guy twice now. Thanks for any help!

kingstreet

Yes.

You'll pay back the £58k to close the current mortgage account.

You'll apply for a new Nationwide mortgage for the purchase price less the equity and associated fees.

Example - you sell for £205k and you pay off the mortgage and fees, leaving £142k equity remaining.

You buy for £340k and have another £13k of fees to pay. Taking that out of your remaining equity means you have a deposit for the new property of £129k and a mortgage requirement of £211k.

The first £58k of that will be on your current deal and the additional £153k on a new Nationwide product.

It would be far easier if porting stopped being described as "moving" a mortgage. That does not happen. On sale, a mortgage is repaid and a new one arranged. It is only the rate which is ported.

Smileyhippo

I disagree with the above. We are also with Nationwide and have ported 2 mortgages previously because of good arrangements. This means we currently have 3 parts to our mortgage - essentially 3 different products so we keep the rates and time etc. You don't pay back what is owed when you move house, but the overpayment can be used as part of the deposit on the new property which will reduce your new loan.

kingstreet

You have one mortgage split into separate sub-accounts which represent the additional monies you have borrowed when you moved house.

You don't pay back what is owed when you move house

Which would beg the question, how does the solicitor offer unencumbered title to the purchaser?

indiegrrl

Quick update: I am 100% kingstreet you're right here, as it is commonsense and I really do not understand our adviser's logic. Anyhow, managed to speak to someone else as he's on holiday this week and she seemed a bit clueless but when I went through the sums as I understand them she agreed. Fortunately we can afford this. I really hope he doesn't advise first-time buyers.