Porting a Mortgage...help!

Hull_City_Boy

Hi everyone,

Myself and my wife are in a bit of a sticky situation, but may have a way out. Bit tricky to explain, but here goes.....

We currently have an NRAM mortgageof £131k on a property worth £120-£125k. I was made redundant in April (luckily have redundacy cover that pays until July 2013) and my wife is employed, earning £28000 per annum. We have additional debts of £31k.

What we want to do is sell our house and port the mortgage (as there is no way we'd get a new mortgage atthe moment) to my mums second home. She has a £45k mortgage left on in. If we got £120k for ours we would like to give her £80k (1/2 the value of her second home) to clear her mortgage and any debts and use the remaining to clear our additional debts (saving £800 per month). The other 1/2 of the house would be purchased from her later. (She would sign the whole thing over to us to make the deal more enticing to NRAM (our mortgage provider) in the first instance.

Is this do-able?? I feel it sounds reasonable in that we are already paying this mortgage (we've had it for 7 years so no erc) and the more expensive house means that NRAM would definately get their money back if we had a big prob....such as me not finding work inside a year or so!

Any help would be greatly appreciated.

kingstreet

You wouldn't pass the initial check as you have no job.

Porting gives you the right to move the rate from your current mortgage to a new one with the new lender. It does not guarantee you a new mortgage.

You would need to sell your property, making an agreement with NRAM for the shortfall between the selling price and what you owe. NRAM would (if you had a job) lend you upto 95% of the price of the next property, provided the mortgage is the same or less than you actually owe. Lenders don't lend on portions of property. You'd have to buy the whole property from her, or she would have to be a party to the mortgage.

Reading what you have written, you are misunderstanding how porting works and the circumstances in which you can use it. It's best described as "you cannot move a mortgage from one property to another."

Hull_City_Boy

Ok thanks. If we sold our house (and came to an agreement with NRAM for the -ve equity), could my wife an mum take out a mortgage on the property? If so we could pay that with the same outcome...I suppose??

kingstreet

You sell the current property, repaying as much of the current mortgage as you can. IN the process, you reach agreement with NRAM as to how you repay the shortfall after completion.

Your wife and mother in law (subject to age/income situation) then carry out a transfer of equity and remortgage the mother's house, repaying mother's existing mortgage and raising capital for another purpose? Is this debt consolidation?

Who will be living in this property? You and your wife? Her mother?

my mums second home

I missed this, first time round. Is this an investment property?

Hull_City_Boy

Thanks again Kingstreet.

Myself and my wife would live there. So the mortgage my mum and Wife would need to take out is 45k to pay the old mortgage, lets say £40k to pay our debts and the -ve equity and £35k for mum....so £120k.

Forgot to say this house is my old family home which my mum wanted to sell, but couldnt so is currently renting it out. (Not an investment

kingstreet

£120k mortgage on a property value of?

What debt is in your wife's name? Credit commitments and dependents will be deducted from her income in establishing affordability.

What's your mother's situation? Income? Time until retirement? Evidence of income after retiring?

Wife and mother's credit history?

Hull_City_Boy

The property is worth £160-170k

Mum is 56yrs and has excellent credit history.

Wife....probably £15k liabilities. (to be cleared by this mortgage)
ok / good credit history no defaults ever.

kingstreet

When you have a buyer for the property and have reached agreement with NRAM for the plan to repay the negative equity, you may wish to put this in the hands of a good whole market broker.

Your mother's age and the period until she retires will have an impact on the term of the mortgage and the monthly payments resulting from that, however, it should be possible to do what you are suggesting.

TrickyDicky101

There's no guarantee that NRAM would let you sell your house if it is in negative equty so it's all a bit moot unless and until you can establish you would be allowed.