Porting mortgage - how much will the new loan be for?

JimmyTheWig

Hi,

I'm sure this sounds like a bit of a silly question, but I would like to know how much we will actually be borrowing. Communication with the lender has been dire so I thought I'd ask you guys what generally happens.

Tied in on current mortgage of £100k.
Buying house for £300k with 70% LTV mortgage. So have applied to port current mortgage and borrow £210k.
Mortgage has been agreed, valuation passed and mortgage offer received.
Mortgage offer states
Loan 1: £100,000 (ported)
Loan 2: £110,000 (new borrowing)
Total borrowing: £210,000

Fine. Everyone's happy.

But the £100k figure was at the point in time that the offer was made. Things are taking their time and mortgage repayments are still being made. So lets say when it comes to completion the current mortgage balance will be £98k.

Does our solicitor just pay off the current balance and then request £210k from the mortgage company? Or do they just request the additional £110k?
I.e. will the real situation be
Loan 1: £98,000 (ported)
Loan 2: £112,000 (new borrowing)
Total borrowing: £210,000
or
Loan 1: £98,000 (ported)
Loan 2: £110,000 (new borrowing)
Total borrowing: £208,000


We'd like it to be the first scenario, but don't want to complicate things with the mortgage company if it is normally the second scenario.


Thanks,

Jim

Dave_Ham

Hi Jim,

Typically, it will depend upon the lender. It will certainly be simple to change nearer the time (depending on which lender of course)

Who is the lender?

JimmyTheWig

Lender is Santander.

Dave_Ham

Ooops.

As you are probably aware, they make this process as difficult and confusing as possible although appreciate the ported rate that is probably at stake.

I have not ported a Santander one recently, although from memory they will re-offer another mortgage when the Solicitor advises to keep the ported rate/product amount separate from the top up.

My view is they will reduce to 2nd scenario, although this is just my opinion as not got one I can check that is recent.

A prompt and detailed Solicitor, should be able to raise in time although this is a ported Santander mortgage we are dealing with....

Good luck

holly_hobby

Lots of peeps get confused, but you port the product (fixed, discount, etc), which will be applied to an equal amount of new borrowings, it does NOT actually relate to the underlying borrowings it applies to - as mortgage borrowings are not transferrable.

So, you are buying a new house for 300k @ 70% ltv = 210k mge requested and agreed.

When your own house sale completes, your solicitor will fully redeem the current os mge say 100k or whatever the final redemption statement gives them - which permits free title for your buyers.

You then subsequently complete on your new house, which brings a brand new mortgage of £210k.

However, as you are being allowed to port your current mortgage product, lets say under your final redemption statement you owe 100k, this means that the transferred or ported product (over its remaining term) will apply to an equal amount of your new 210k mge, giving you a residual 110k to be placed on a product selected from their curent portfolio.

Obviously if your final statement has only 98k owing, then the ported rate will only apply to 98k of your new borrowings, and so on and so forth, ie if you owe less than 98k etc, etc, , you get the general idea.

So unless you use any extra free equity at redemption off your current mortgage (ie you have an extra 2k as you owe 98k instead of 100k), to reduce you new borrowings, you will always be borrowing 210k, no matter what you owe at redemption on property no 1. But what will change is the amount of your new mortgage that will be effected under the ported rate.

The reason why its split on the offer, is that there will essentially be 2 different products running simultaneously under the same overall mortgage account.

Does that make sense ?

Hope this helps

Holly x

Dave_Ham

Hi Holly,

This makes sense and reads well for someone who does not understand porting.

Jim's question is pretty specific though and not all lenders will stick with the exact original figures, as on a repayment mortgage the port value will be less.

Many lenders (certainly Santander) are struggling with the port process and on expired/withdrawn products are having to rebuild the entire Key Facts/Mortgage Offer.

Its hard to explain in written format, well I am certainly having a job although I understand the question; cannot confirm 100% the correct answer..

Interested in others opinions, as I think this will turn up time and time again.

Any broker done a Santander port recently?

JimmyTheWig

Dave_Ham wrote: »

Ooops.

As you are probably aware, they make this process as difficult and confusing as possible although appreciate the ported rate that is probably at stake.

Yes, it has been quite tough at times.
As it happens I'd be more than happy to lose the current rate, but it's the ERCs that make it worth porting.

My view is they will reduce to 2nd scenario, although this is just my opinion as not got one I can check that is recent.

A prompt and detailed Solicitor, should be able to raise in time although this is a ported Santander mortgage we are dealing with....

Good luck

Thanks. After the problems we've had I'm not risking asking for any changes. Would have prefered the 1st scenario, but the 2nd is fine.

JimmyTheWig

holly_hobby wrote: »

So unless you use any extra free equity at redemption off your current mortgage (ie you have an extra 2k as you owe 98k instead of 100k), to reduce you new borrowings, you will always be borrowing 210k, no matter what you owe at redemption on property no 1. But what will change is the amount of your new mortgage that will be effected under the ported rate.

Yes, I understand that whatever they do it will be £98k ported rather than £100k ported.
It's just the question of whether they would automatically use the extra £2k to reduce the mortgage.

In effect, the question is are they taking my application to mean that I want to borrow a total of £210k, or are they taking my application to mean that I want to borrow an additional £110k?

Thrugelmir

JimmyTheWig wrote: »

In effect, the question is are they taking my application to mean that I want to borrow a total of £210k, or are they taking my application to mean that I want to borrow an additional £110k?

You wish to borrow a £210k as that's the applied for amount.

Santander will cap the existing mortgage at the value on date of completion. Any amount over and above this up to £210k will be treated as a seperate sub account within the mortgage at the new interest rate.

The solicitor will disburse the funds to settle costs, the mortgage etc, then any excess funds will be repaid to you.

JimmyTheWig

Also, will it make a difference if I make an overpayment now?
Would that just confuse everyone (the last overpayment I made, during the application process, appeared to confuse everyone)?

holly_hobby

JimmyTheWig wrote: »

Yes, I understand that whatever they do it will be £98k ported rather than £100k ported.
It's just the question of whether they would automatically use the extra £2k to reduce the mortgage - no they can't do that without your permission., although you can choose to use any extra free equity to increase your deposit, and therefore reduce youronward borrowings - eg reduce from 210k to 208k

In effect, the question is are they taking my application to mean that I want to borrow a total of £210k - YES, or are they taking my application to mean that I want to borrow an additional £110k? - NO

Jim, have a re-read of my earlier post which covers the bones ...

You are only porting ie transferring the mortgage product (fixed etc) from one property to another - not the underlying borrowings themselves - as debt is non- transferrable.

So although it may seem that you're only increasing your borrowings with the lender, it is in fact all classed as new borrowings (and underwritten as such), as your current mge account will be closed when you sell that property.

Hope this helps

Holly x