Quick mortgage porting question

andrewm1981

Hi, just a quick question if I may, as I can't seem to get my head around it:

I'm half way through my mortgage of £125k, having paid off £50k roughly.

If I want to buy a bigger place, can I port the mortgage across, and use the £50k that I have paid off as a deposit?
(Port the remaining £75k on the existing rate, and get another mortgage for the extra £100k or so that I want to borrow?)

Thanks in advance

Andrew

mrsmchapman

I'm not sure if this help, but we are also porting our mortgage to a new property. Our fixed rate on the existing property was for 2 years and doesn't expire til oct 2014, this will continues into the new property and the the extra we need to borrow will also be on a two year fixed but at a different rate. We will have an approx 7 month period where the 1st mortgage will become variable and then we can tie them both together when we look for the next best rates. Hope this makes sense?

mrsmchapman

You will need to check that your mortgage will allow porting, I'm not sure why they wouldn't and also check the period left on your fixed rate, and like us there will be a gap later on.

andrewm1981

The mortgage is definitely portable, and the rate is BOE base +0.49% for the rest of the term (which is obviously fab). It's just if the £50K equity can be used as a deposit. If so:

£50K deposit+£20K saved =£70K
salary =£45K (x4 roughly) £180K, plus deposit =£250K. happy days

if not, then £180K plus £20k saved = rubbish LTV, and problems!!

(999/999 experian score, no loans, no kids etc...)

Does the maths seem to work out?

thanks

Hopelessly_Hopeful

Hi

Do you know you will get x4?

According to MSE - just based on 45k -Based on typical bank's lending criteria the likely upper range of a mortgage you could get is between £146,000 and £180,000

HHx

mrsmchapman

All we had to work out was how much equity we had after paying off the existing mortgage.

Sold for £245, mortgage £129 left us £116k equity, this then decided on what we needed to borrow offset against any savings we had to add to give a decent LTV. Your equity is kind of your deposit.

We have just filled in our solicitor forms and have been told we don't need to state a deposit as this transfers from the chain and equity in the house.

If you are unsure further maybe speak to an independent mortgage advisor, this is what we did, and he advised us what we needed to put into the house (savings) to get a good LTV and he also advised what our max borrowing would be.

Thrugelmir

andrewm1981 wrote: »

The mortgage is definitely portable,

Porting is at the discretion of the lender. As merely infers the right to transfer the existing terms. You will need to apply for a new mortgage and which is subject to current lending criteria.

andrewm1981

The mortgage is portable, as defined in the original mortgage agreement.

Im assuming 4x mortgage, although it could be less. I say 4x because everything is in my favour, so I cant see why I wouldnt be in the upper percentiles, although affordability is now the main deciding factor.

thanks for the help guys, and from this I can assume that the equity paid off does form part of the deposit for the new mortgage.

thanks! Andrew

kingstreet

The mortgage paid off is your equity in the property.

For example, if you are selling for £200,000 and your mortgage is £100,000, your equity of £100,000 is in the hands of your solicitor on completion day.

If you are buying for £300,000, he takes that £100,000 and adds to it your new £200,000 mortgage and transfers the purchase monies to the vendor's solicitor.

If you are porting the rate from the old £100,000 mortgage, you'll have a new £200,000 mortgage, with the first sub account for £100,000 on the current rate and the other sub account of £100,000 on a new rate from the lender's current range.

The new mortgage is subject to status, valuation and criteria.