Extra advice costs from overpaying and porting

jamesd

The FSA's Mortgage Market Review is introducing higher costs for those who port their mortgage and increase the amount borrowed. This transaction will require advice at a variable cost, perhaps £500-£1000 or so. If you plan to move and port your mortgage, be sure that you consider the impact of this extra cost on whether you will or won't be better off by overpaying.

You can avoid this extra cost by using offset accounts or facilities that let you withdraw capital, or by saving and investing instead of overpaying. In these case you can withdraw all of the extra money and this may allow you not to increase the amount borrowed. Either because your mortgage amount is now no larger or because you can use the former overpayment money to reduce the amount of new borrowing you need to do.

The same applies to remortgage or other simple contract changes, no need to pay for advice if the amount borrowed doesn't increase.

This detail is in Table 2 in paragraph 2.18 on pages 14 and 15.

Most of the new rules, including this one, don't take effect until April 2014, so there's a fair bit of time to plan for it.

edinburgher

Thanks jamesd, very helpful.

Those rules will come into play just a few weeks before I remortgage for the first time, so well worth knowing about