Porting Mortgage and Borrowing More

billa_champion

Hi

I was wondering if anyone can give me some advice.
I am in the process of selling my flat and porting the existing mortgage and then borrowing more to enable me to buy the house. The figures are below:

Mortgage being ported over: £181,000
Extra borrowing: £124,000
Value of Property: £365,000

My existing lender (Woolwich) has said that they can lend me the 124K at 4.89% fixed for 4 years (fee £499). My question is that can I borrow from another lender as my LTV will only be (124k/365k) = 34% or will the new lender look at the debt as whole and include the 181K that I have with Woolwich and calculate the LTV is 84%.

I hope that makes sense..!

hamster2013

your LTV is not 34%
they will look at your full outstanding loan, including the 181K too

you need to ensure that the new added amount fits your afordability
and that you will not be struggling to meet repayments should the interest rates increase after 4 years

don't forget your stamp duty of 3% on the purchase of 365k, which is an eye watering £10950, hope you have that stashed somewhere too under a mattress

kingstreet

You can't transfer a mortgage from one property to another. You are making an application for a new mortgage on a new property and need to apply for the whole amount.

If you take that new mortgage with your current lender, they may allow you to "port" the rate from your existing mortgage to the first part of the new mortgage, with any extra money on one of its new products.

A residential mortgage is a "first charge" and you can only have one of those on a property.

holly_hobby

As stated, and is a common mis-conception, porting relates to a request of your current lender, to permit the transfer of mge product (fixed, discount, etc), from your current mge arrangement to a new one - with permission to do such at the lenders complete discrection.

So, in this case, you are effectively applying for a new total mge of 305k (ie 181k + increase of 124k), which is subject to full underwriting and status checks on 305k.

If you also wish to tsf your current mge product (over its remaining term) to your new mge, this is referred to as Porting, and if agreeable witht the lender, will be applied to 181k of your new mortgage borrowings, with the residual 124k placed on a product from their current portfolio.

Hope that explains

Holly

billa_champion

Thank you all for your replies - you're all awesome!
It's put my mind at ease (well as much as a mortgage of 305K will allow!). After I'd gone through the whole process with the Woolwich I thought about the scenario I've mentioned above and thought I'd been too hasty and not got a cheaper rate by looking elsewhere for the 124K. It looks like I had no choice but to go with the Woolwich.

Thrugelmir

Have you had formal agreement to the port application?

I assume that this is at a good rate of interest.

dimbo61

You need to look at the 2 parts to this mortgage?
You HOPE to port the £181K at your current rate and borrow another £124K at 4.89% fixed for 4 years
have you looked at other lenders ? You maybe better off borrowing the whole amount on a new deal from a new lender

billa_champion

Hi all once again thanks for the replies. Woolwich have agreed in principle to port the mortgage (181K at 3.89 until dec. 13 and then switched to 3.98) and to lend the 124K. All the paperwork is through I just have to sign it and send it all off.

sammyjammy

Remember though that the existing 181k will go onto the variable rate in December when it ends but you'll still be tied in with the 124k, this makes you very vulnerable to changes in interest rates.

billa_champion

You're worrying me now! Do you think I should look at remortgaging with a new lender even if I have to pay early repayment charge!

sammyjammy wrote: »

Remember though that the existing 181k will go onto the variable rate in December when it ends but you'll still be tied in with the 124k, this makes you very vulnerable to changes in interest rates.

holly_hobby

Hi,

Don't worry Billa or get stressed .....

Its simple really .....

When your 3.89% ends December 2013, you can simply leave it on variable rate OR you could ask Woolwich what existing borrower rates they have available for you.

Now if you choose to place the 124k onto another product, obviously your end dates of your 2 products will still probably be staggered, so to try and bring them in back in line ...

When your (124k) 3.89% rate ends in Dec 13, you ask Woolwich what existing borrowing products they have .... from whats offered you look to choose (if they don't have a 3 1/2 yr product !), either a 3 yr term (meaning it will end slightly short of the 4 yr rate of 4.89% ending in 2017), OR another 4 yr deal (meaning it will end slightly after your 4.89% rate ends in 2017).

This means that you'll only have an element of borrwings on SVR for a relatively short period (124k if you choose a 3 yr product OR 181k if you choose a 4 yr product) - before all products will end, and you will have the opportunity to place the entire os mge on 1 singular product.

Having said that ........

You could elect to leave the 124k with its 3.89% rate ending in Dec 2013, on SVR right through until 2017, when the remainder of your mge (181k @ 4.89% x 4 yr fixed) will also tsf to SVR - and then put the whole lot onto 1 single product, either by remaining with Woolwich OR seeking a lower payrate with an alternate lender (subject to status).

Hope this helps explain ... as simply as possible, apologies if its not come across as clearly as when sitting down on a 1 to 1 ( but your adviser will be happy to walk you through this).

Good luck

Holly x