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

JimmyTheWig

So, Holly, you would say that if I made an overpayment on the current mortgage now the new borrowing would automatically increase to keep the new total the same?

And you disagree, Holly, with Dave Ham (who certainly normally knows what he's talking about) when he says it depends on the lender?

holly_hobby

Now don't try and go down that road Jimmo, you've asked the fundamentals of porting, which I've discussed.

Porting is the same with any lender, it only ever applies to the mortgage product, the mge on the new property is always under full underwriting and entirely classed as new mortgage borrowings, and thats always been the case, well over my just on 25 yrs involved in mortgages and FS that is.

Dave's post is how santander will work out how the overpayments will affect the os mge, and resulting os mge at completion will be, given the futher overpayments between offer and completion. 2 completely different aspects, and there's certainly no disagreement coming from me on that aspect, as I haven't discussed it, so you've slightly crossed wires there.

But fundamentally if they've agreed to advance you via a formal mortgage offer, 70% ltv equal to 210k borrowings on your new house, that advance will be available, whether you have extra capital available to increase your deposit and reduce what you borrow (ie as a result of a lower than expected redemption fig on property no 1), or instead retain it in your saving acct etc, that will be your choice. (subject to any ad hoc uw checks that affect affordability).

Hope this helps .. unless I've maybe got my wires crossed, and completely mis-understacding what you're asking.

Holly

JimmyTheWig

holly_hobby wrote: »

Now don't try and go down that road Jimmo

What road? Overpayments, or whether you agree with Dave Ham?

Dave's post is how santander will work out how the overpayments will affect the os mge, and resulting os mge at completion will be, given the futher overpayments between offer and completion. 2 completely different aspects, and there's certainly no disagreement coming from me on that aspect, as I haven't discussed it, so you've slightly crossed wires there.

Now I'm confused.
How can there be doubt over how Santander will work out how the overpayments will affect the outstanding mortgage, when the only mortgage at the time of the overpayments is the current one?
And, surely, where Dave Ham says "they will reduce to 2nd scenario", where my second scenario was total borrowing of £208k, that is different to what you are saying?

I think I've missed the point somewhere along the line...

holly_hobby

My comment related to there being no argument between Dave and I - and no desire for someone to try and create the impression of one.

Getting back to your/my understanding...

Dave is referring to whether Santander will apply the ported mortgage product/rate to the 100k figure quoted in your formal mortgage offer - given that there may be further capital re-adjusments due to continued overpaying etc

OR

Re-adjust it, to reflect the actual mortgage amount o/s on the date of redemption (if lower) - ie 98k or whatever, and only apply the port to this reduced figure.

Which, if you don't choose to reduce your new mge borrowings by the same amount, will obviously increase the residual amount of your new 210k borrowings, that will go onto the chosen supplementary rate from their current range.

This is because when you port a mortgage product, it will be applied to an equal amount of new borrowings, that it covered at the time of porting (ie when the mge it is being transferred from is redeemed)

ie ....

New mortgage, on a new home of 210k borrowings

Current mge offer states mge product ( eg say 2% fixed or whatever is is) currently applying to existing os 100k mge may be ported
which means that ...

100k of your 210k mge will be charged at 2%, and the residual 110k (ie 210 - 100) will be on a product from their current range, eg 3% fixed (or whatever is chosen)
Giving us ...
= Total borrowings 210k (with 100k @ 2% and 110k @ 3%)

But when you actually complete ....

you only owe 98k on property no 1 - meaning that (if santander re-adjust the offer to reflect this), means that only 98k of your new mge will be under the 2% ported fixed rate

With the residual borrowings of your 210k mge (ie 210 - 98 =112k), that will be under the new product chosen.

The point now being that the amount under the supplementary rate has now increased from 110k to 112k, to accomodate the fact that only 98k of your 210k mge will be under your ported rate.

Meaning ...

= Although total borrowings remain at 210k (we now have only 98k under the 2% ported product, and 112K @3% new producdt)

As you can see, the actual new mortgage amount hasn't changed - its still 210k, its the underlying amount of borrowings that will be charged under A) the ported product terms and the new product, that has altered.

Does that make sense ? Hope so.

H

JimmyTheWig

holly_hobby wrote: »

Does that make sense ? Hope so.

Possibly.
Are you saying that of my scenarios

JimmyTheWig wrote: »

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

scenario 2 won't happen unless I ask for it to happen but there is a third scenario

Loan 1: £100,000 (ported)
Loan 2: £108,000 (new borrowing)
Total borrowing: £210,000

if they choose to port the amount in my mortgage offer?


[By the way, in my case I want as much as possible in new borrowing!]

Thrugelmir

There's only one scenario. Hence why the final day of the transaction is called "completion", i.e. conclusion, fulfillment. When your solicitor , who is also acting on behalf of any lenders involved, ties everything up.

holly_hobby

JimmyTheWig wrote: »

Possibly.
Are you saying that of my scenarios

scenario 2 won't happen unless I ask for it to happen but there is a third scenario - yes correct

Loan 1: £100,000 (ported)- relates to the amount of new mortgage that your current mge product will apply to)
Loan 2: £110,000 (new borrowing) - its all new borrowing
Total borrowing: £210,000 if they choose to port the amount my mortgage offer? - its 210k new borrowings regardless - see above

[By the way, in my case I want as much as possible in new borrowing!]

Nearly Jimmo ..

If you want to keep the borrowing at the current mge offer on your new property ie 210k - you just keep the new mge advance requested unchanged at this sum, regardless of what you os mge on prop no 1 is when its repaid.

Which means that if your current mortgage is actually repaid at a figure lower than 100k, then you just retain the extra equity from your new sale proceeds accordingly.

The 2 transactions of repaying 1 mortgage and effecting (drawing down) your new mortage, are completely separate exercises.

As a simple example ..

You have sale agreed at 200k on your current house, and have a ballpark redemption sum of 100k, which if unchanged, will obviously give you 100k free equity (ie 200k - 100k), for you to use entirely or partially as a deposit on your next purchase.

But due to the continued payments, etc, byt the time you actually complete your sale, the oustanding mortgage is only 98k - which means that instead of 100k free equity for you to use as deposit, you now have 102k free equity at your disposal.
(ie 200k - 98k = 102k)

So as you can see, whether (as in this example) you choose to utilise the extra 2k (or whatever) available to increase your deposit, and therefore reduce the new borrowing, is your choice - if you don't want to do that, thats fine - but do remember that its a see-saw, so if you choose not to take the opportunity to borrow less, you will effectively incur interest that otherwise you would be able to avoid (although on 2k or a similar small amount, it would be neglible over a medium to long term arrangement).

Hope this helps, and makes sense !:o

Holly x

Dave_Ham

Ok, my head hurts.

I think you both have the principles of porting well and truly nailed..

The issue is and I unfortunately do not have the answer, is that many lenders have technical/practical issue with a ported product/purchase.

The issue is that the key facts/mortgage offer is not accurate for the 3/6 months as per a normal mortgage offer.

Therefore it requires manual intervention post mortgage offer and this is the basis of our misunderstanding/debate.

You can definitely influence this, although appreciate you do not want to rock the boat and I fully understand why.

Hope this helps, although appreciate that I actually have not given any definitve answer.

Should bump into a santander mortgage advisor next week, so will ask the question when I do..

Good luck with the move Jim...

Dave_Ham

Spoke to a Santander mortgage advisor today, their default position is to keep borrowing the same and add the reduction in ported balance to top up product.

Think this is what you were hoping, so alls well that end well.

I do not have 100 percent confidence Santander will get this correctly processed, although wish you luck they do

JimmyTheWig

Dave_Ham wrote: »

Spoke to a Santander mortgage advisor today, their default position is to keep borrowing the same and add the reduction in ported balance to top up product.

Think this is what you were hoping, so alls well that end well.

This is what I was hoping and also agrees with what Holly is saying, so fingers crossed.

Though when you say

I do not have 100 percent confidence Santander will get this correctly processed, although wish you luck they do

I completely agree with you!