How would this mortgage situation work?

FlashBarry

Please could you help me understand this scenario?

Current house value £100k
Offset mortgage £80k Fully offset with £80k cash, low interest rate (1%)
(mortgage is portable)

Desired house £300k

I would like to keep our existing mortgage as it is such a great rate, but how would it work?

Use £80k as offset cash and £20k equity as deposit?

Keep Mortgage 1 as £80k

Add Mortgage 2 of (300 - (20+80) - 80) £120k at going interest rate of 4% or whatever?

Is this right?

Also, what other fees/taxes am I likely to have to pay for as part of a house move/purchase of £300k house? Would this come out of my offset cash, or added on mortgage?

dimbo61

Now the question you need to ask your current lender is will you allow us to Port our fantastic offset mortgage rate of 1% £80K and lend us another £120K at the rate you offer to existing customers taking extra borrowing.
New MMR rules mean you need a very good income of £50K+ per year I Think ! to get a £200K mortgage.
Speak to your lender first

ACG

Ignore the fact its an offset - its still an £80k mortgage.
So you would sell the house, port the £80k over and then take out a further advance (effectively mortgage 2) with the same lender for the difference between the £80k and the purchase price minus your deposit.

£300k (purchase price) - £80k (your existing mortgage) - your deposit = new mortgage.

amnblog

ACG is right.

You have an £80,000 mortgage which you can presumably port to the new property and top up.

You also have £80,000 in a bank account.

The fact that one is currently 'offsetting' the interest on the other is just a function of the contract. They are not linked in any other way.

You may find that your product options on the top up element need to be from an 'offset' range restricting your options.

amnblog

Incidentally, you are likely to be losing a little money by offsetting a mortgage rate of 1% with £80,000.