porting an NRAM mortgage

emjayvee

I am in the process of reviewing my financial circumstances; to that end my property is being marketed for sale.

Offers received to date do not cover the outstanding loan amount, being approximately £20,000 less than required

However as I am not asking for additional borrowing, rather I wish to port the mortgage to a property of significantly less value, does the shortfall become less of an issue as I would be reducing the overall loan by half by repaying £160,000.


Current loan £290,000 (including completion fees)

Proposed purchase £130,000

The proposed purchase is for a property that has recently been repossessed and requires a modicum of work, however once completed the property will be worth significantly more & have approximately (£55,000 – £65,000)

Can I halve my debt to Northern Rock by repaying £160,000 and port the remaining £130,000?

Or, as the initial LTV was based on an 85% valuation of £335,000 six years ago, would NRAM only lend 85% of £130,000 = £110,500, rather than the whole £130,000.
If this were he case I would be repaying 62% of the original loan, £179,500

Does it really matter that it is £20k short if you are porting the mortgage as it will still have to be paid eventually?

kingstreet

You need to speak to them because you need permission to sell at a price below the existing mortgage amount. They will tell you about porting when you speak to them.

AFAIK they won't port negative equity. They will allow upto the original loan to value of your mortgage and that's it.

emjayvee

Thank you for your reply.
I'm awaiting a call back from their porting team, hopefully next week.

My initial assumption was that they would only lend the original 85%LTV on the proposed property, so thanks for confirming that.

It's just the anticipated £20k shortfall that I need clarity on.

I understand there would be a problem if I was selling and closing my account with them still owing £20,000, but as I'm continiuing my relationship with them, whilst paying back almost 60% of the original loan I just wondered if anybody else had experienced a similar situation.