Moving house and porting mortgage

Mack_and_Cheese

Hi all, I'm hoping that someone can offer me some advice. I'm looking to move house in the near-ish future and am just a bit clueless on porting my mortgage from my current property to the new one. I guess I should start with the facts below...

Current property

Bought at £187,000 with a 10% deposit
Remaining balance of approximately £163,500 with 32 years remaining.
2 years (and a bit) remaining on current fixed term mortgage (product switching to a lower rate in May).
Currently paying a few quid above £800 a month for the mortgage.
Valued last October at between £200,000 and £215,000 (some work done since and ongoing - nothing major)
Zoopla estimate for rent is about £800pcm

Prospective property

Accepting offers of £189,950
Potential rental estimate aroud £800pcm again

Having recently agreed a switch in the mortgage product on my current address to save myself £160 a month it seems the best option may be to port the mortgage over to the house I'm hoping to buy based on selling the house I'm in.

The bit I'm confused about is that potentially I can make a fairly decent margin on selling my house even with legal fees deducted but would that cash surplus need to be worked into the new property as an overpayment on the mortgage, or would I simply be able to keep this excess in cash terms in order to use as I choose?

Another factor is that since getting the first mortgage my income has dropped a bit, but while my income (and my partner's) is apparently high enough to borrow the same amount of money I was originally loaned with the mortgage, I understand that a reassessment is required for porting, and it may be that the bank have changed their lending criteria since my first mortgage application.

It has also been suggested to me that it may be possible to port the mortgage to the new property and take out a supplementary buy to let mortgage on my current home. It seems an interesting option as I would like to build up somewhat of a portfolio as a pension (and for a few extra quid in the long run so my wife will let me buy a motorbike!). I could potentially raise enough for a new deposit through scrounging and begging. With that said, would it simply be easier to move out (I can live with the inlaws free of charge for a few months) and rent out my current property privately as opposed to a buy-to-let deal? If I can cover my mortgage repayments with a private tennant could I then take out a second mortgage to purchase a new property?

Sorry about all the questions, I know that its a lot of garbled information! Any advice would be appreciated! Thanks!

kingstreet

Porting is moving the rate from your old mortgage to a new one on a new property, if you qualify. You may be able to replace the old sole mortgage, with a new joint one. The usual status checks, valuation and loan to value are taken into consideration. You can't transfer a mortgage from one property to another.

Usually, the equity from selling your present home is the "deposit" for the next property and the purchase monies are formed by this and the new mortgage.

If your equity exceeds the minimum required by the lender for the product you have selected, you can keep some of it back. It will be paid to you by your solicitor on completion of your sale.

Some lenders will allow you to remortgage your current property onto a BTL product and port your current rate onto a new mortgage for a new residence, some don't. You need to check your lender's policy.

If you do this, where will the deposit for the next purchase come from? You can normally only remortgage onto BTL upto 75% of the value of the property, that would be £150k on a £200k value and you already owe more than that.

Consent to let from your existing lender may negate the need for a BTL remortgage, but again, where's the deposit for the new purchase coming from?

Mack_and_Cheese

Hi Kingstreet, thanks for the reply. Any deposit would mostly come from scrounging from family. That said I'm not sure how likely it would be to cover the deposit as well as legal fees and I'd rather not dip into my credit card for that aspect. At present it may be more prudent for me to sell my current house and perhaps keep the portfolio building until a later date!

kingstreet

If you do decide to let the current property, a new mortgage will see a higher minimum deposit, with lenders setting lower maxima, such as Nationwide (85%) and Abbey/Santander (80%), so this may confirm selling is your only real option.