Understanding porting a mortgage

mjn

We have had our house on the market for months and have accepted an offer and have found a place to buy.
We have a 85% LTV self cert mortgage which we have had for 5 years with no late payments. Mortgage amount £248600. The new property would require a mortgage of £195500 (85% of the purchase price)
After phoning Birmingham Midshires in July when we put the house on the market, we were given the impression we could just transfer our product to the new property paying back the original amount and they release the new amount. That's why we decided to sell.
My broker says it would be treated as a new application and BM would only offer a 75%LTV mortgage. We also wouldn't meet their lending criteria. Yet we have paid the larger amount with no problems for five years.
Surely 'porting' a product is everything we signed for. Rate, term and LTV.
Would our previous good record count for nothing?

GMS

Porting is a new application which would need to meet criteria at the point of application, regardless of the amount or past record.

Which part of criteria do you no longer meet? Why was the previous mortgage self cert?

Thrugelmir

Has your mortgage been interest only?

mjn

The biggest problem is we haven't enough equity to meet the 25% which would now be required.
I am also a self employed tradesman who's earnings have dropped since taking out current mortgage.
Is there any point appealing or going to the fsa?
Gutted we can't buy the new place because with a bit of decorating and restoring it will be worth over £280000

Thrugelmir

mjn wrote: »

I am also a self employed tradesman who's earnings have dropped since taking out current mortgage.
Is there any point appealing or going to the fsa?

If your earnings have dropped then there's the reason for the lower mortgage offer.

No point in appealing. As lenders have the right to decide who they lend to. Not a matter for the FSA to become involved with.

Simon_gloster

Porting is agreed subject to you meeting ccriteria today. Although you have a bigger debt now, that was based on info supplied back then.

Continue paying your mortgage off and reassess in the future on a different property and not by self certing as you'll never get a mortgage.

mjn

We haven't put an application yet so they are unaware of my earnings.
My gripe is, why can't they reduce the amount we borrow and keep 85%LTV which is the product I applied for.
It is also 2.25% above base rate tracker mortgage.

Simon_gloster

Because your applying again, i'm sure you'll get a loan just not the amount you need. Why the 75% restriction? As mentioned, are you on or do you want interest only?

Thrugelmir

mjn wrote: »

My gripe is, why can't they reduce the amount we borrow and keep 85%LTV which is the product I applied for.

That's not how lenders work. Simple as.

Since the crash of 2008 much tougher to borrow. Days of easy borrowing are over.

I assume you've no repayment vehicle for your current interest only mortgage. As you'll need to switch to a full repayment mortgage. Hence the lower offer

mjn

We are on interest only.
75% is the highest they now offer. I must be naive in thinking that porting the product meant the whole thing

Thrugelmir

mjn wrote: »

We are on interest only.
75% is the highest they now offer. I must be naive in thinking that porting the product meant the whole thing

Even since last July the market has changed. The FSA (Oct) has introduced regulations placing an onus on lenders to ensure that borrowers have ability to repay their mortgages. Although many lenders were already ahead of this requirement before then.

With low base rates continuing far longer than expected. Tracker mortgages are costing lenders money. So lenders will use every way possible to either reduce their exposure or block the port. All totally legitimate I should add.