moving house

Hello123_2

can someone give me some advice please?

we are in a fixed deal until 31st jan 2014 but want to move house.

the product is portable (subject to the usuals) however we need to borrow an additional £60k for the house we want.

Lender has offered us 'additional borrowing' but the rates are higher than mortgage rates.

Are we better off remortgaging completely & paying the £3k ERC?
Or taking the add borrowing?

current mortage - £100k @ 3.2%
add borrowing - £60k @ 4.9% plus £1k set up fee

The lender is santander/abbey. Im aware they are waiving erc's (at their discretion) if theres less than 6 months left on the product - would this apply if moving home as the buying process can take a few months & therefore lead us into juneish?

hope someone can help thanks

bigadaj

If you quote your ltv, ie borrowing compared to purchase price then you might get some response on whether you might be worth moving or not.

Hello123_2

forgot to ask do erc get added on top of what we borrow or would they say your income allows you to borrow £160k but -£3k erc so you can borrow £157??

bigadaj

Just bumping my post.

Thrugelmir

Lender has offered us 'additional borrowing' but the rates are higher than mortgage rates.

Than what mortgage rates?

Hello123_2

sorry the ltv would be 75%.

i meant generally mortgage rates that i have looked at on mse are 3-4%

thanks

kingstreet

Have you actually told them you are moving house?

The expressions you are using suggest they think you want to borrow extra money on your current mortgage, rather than on a move.

I'd expect 4.9% to be the rate for a further advance, not for a supplementary product to accompany porting.

The way moving or porting works is different and I think they may have got the wrong end of the stick.

You need to apply for a whole new mortgage for the full amount you need to borrow. A mortgage isn't transferred from one property to another, so as the old one ends when you sell, a new one starts as you buy.

You take the first part of the new mortgage, we'll call that Sub Account 1, on the ported rate from your current mortgage. The balance, sub account 2, will be offered on one of the lender's current homemover products of your choice.

Your mortgage is therefore made up of two parts, representing the two interest rates, but for the whole mortgage amount you need to purchase your new home.

Please confirm with them they understand what you are trying to do.

From Abbey criteria;-

It is possible to ‘port’ most existing products to a new mortgage providing it is for house purchase/home ownership but not to a property being re-mortgaged or owned mortgage-free. A customer's entitlement to port their mortgage product is always subject to the conditions for transferring the loan to a new mortgage in their Mortgage Terms and Conditions; in particular, any new mortgage application made will be subject to a full credit assessment and the customer/property must meet our lending criteria at the time of the new application. If we do not agree a new mortgage the applicant will not be able to port their mortgage product and they may then be required to pay an Early Repayment Charge if they subsequently redeem their existing mortgage.

Where redemption of the existing mortgage and purchase of the new property is not simultaneous, providing the purchase of the new property completes within three months of the redemption date, the existing product can be ported to the new mortgage and any early repayment charge will be refunded, as long as the customer takes the previous product for the full amount to their new mortgage.
On redemption of the existing mortgage the early repayment charge is paid in full and a refund will be made on completion of the new purchase, as long as the product is ported. If the new mortgage is less than the existing mortgage, the early repayment charge refund will be a proportionate amount.

Any additional borrowing must come from the new business mortgage product range.

See also ERC waivers for existing customers moving home section.

and the ERC waiver section;-

If an existing customer moving home does not want to port their existing deal they have the following options if they are still within their product period

Pay their ERC in full and select a new business product
If the customer has less than 6 months remaining until product expiry at the time of application for a new mortgage, 100% of the ERC will be waived as long as they borrow at least the same amount. If the new mortgage amount is less than 100% of their current balance they are eligible for a proportionate ERC waiver. See an example below of an indicative proportionate ERC waiver:
Current mortgage £100,000
New mortgage £90,000
ERC waived 90%

In the future, we may withdraw this offer.

You will need to inform your client that they must tell their solicitor to deduct the full or partial amount of ERC waiver from the redemption monies if redemption and completion are simultaneous. If completion is non-simultaneous, the customer must pay the full ERC due on redemption. As long as completion of the new mortgage is within 3 months of redemption, your client can then request a refund of the full or partial ERC.

Hello123_2

Perhaps I wasn't clear then :-/ Thanks for clearing that up!

So hopefully I can port my current £100k on my current deal then borrow an extra £50k on whatever deals they have - is that right?

So technically there will be 2 rates running on the 2 amounts?

thanks so much for your help!

Hello123_2

am i also right thinking that the erc waiver only applies if moving house not re-mortgaging in current home?

kingstreet

Yes.

To both.