How does Porting work and is it worth overpaying now?

Lu_Lu

I am thinking about all of this way too early as it will probably be another 2 years or more before we seriously consider moving (need to clear CC debt, save for moving costs etc, finish house so it looks nice etc).

We have just started a 5 yr fixed deal with HSBC too so obviously don't want to be paying high ERC.

But if we do move in a number of years how does porting work? Will we have to take a mortgage for additional funds? We may be looking at almost doubling our mortgage to get somewhere big enough and assume that any 'new' money will be at a different rate.

After we clear the CC later this year we will also be in a position to overpay the current mortgage also. Is it worth doing or shall we save that extra £150 per month towards deposit/ fees?

Thanks for your advice - only ever moved from rented before so not moved up the property ladder!

kingstreet

When you sell your current property, your mortgage is repaid. If you take a new mortgage with the same lender, you may be able to port the rate from the old mortgage to the first part of the new one, for the amount you repaid.

Any increased borrowing is usually offered on one of the lender's current products at that time.

You will end up with one mortgage, split into two sub-accounts, to reflect the split borrowing/rates.

You have to qualify for the new mortgage - income, affordability, valuation etc. There is no guarantee.

Lu_Lu

kingstreet wrote: »

You have to qualify for the new mortgage - income, affordability, valuation etc. There is no guarantee.

Thanks for your reply. I know we have no guarantee going to need a long discussion with our lender when the time comes but we have good salaries, a lot of equity and will have saved more £ so hoping it will be quite positive or at least give us a realistic budget!

kingstreet

I'm glad you understand the concept.

You'd be surprised at the number of posts we get on here where the member thinks portability means a guaranteed mortgage they can move from one property to another, regardless of circumstances.

amnblog

You intend to move in 2 years but took a 5 year fixed rate?

Lu_Lu

amnblog wrote: »

You intend to move in 2 years but took a 5 year fixed rate?

At the time of agreeing to the mortgage we had no intention of moving in the next 5 years, but as we all know plans and visions change and we may look at moving sooner, which is why we will port the mortgage rather than repay it early and get another one. As I say, though if we can't we can't and we'll be fine where we are.

Lu_Lu

kingstreet wrote: »

I'm glad you understand the concept.

You'd be surprised at the number of posts we get on here where the member thinks portability means a guaranteed mortgage they can move from one property to another, regardless of circumstances.

I know and we also got this mortgage without having to go through the new lending criteria so also understand that 'affordability' isn't as easy as it once was. We don't see a problem but will wait to see what the bank thinks.

Pie in the sky thinking at the moment of course.

Yorkie1

What interest rate are you on at the moment?

When porting, the amount o/s on the existing mortgage transfers on the same rate, and top-up balance is on a new rate.

One thing to bear in mind when doing the calculations is how low your interest rate is at the moment, so you don't end up paying most of that off and then having to take out a larger top-up on a higher interest rate when porting.

Thrugelmir

Lu_Lu wrote: »

Pie in the sky thinking at the moment of course.

Throw in 7% interest rates to the mix. After clearing your debts may pay to build some equity as well.

dimbo61

So you need to look at all the options.
No point putting £500 a month into regular saver at 4/5% before Tax if you are payung 18/19% on CC debt !
If you have 0% deal for 24 months then maybe regular saver or overpaying the mortgage each month is the way to go.
The less debt, more equity and higher income the more you can borrow and afford !
Most fixed deals still allow 10% overpayment each month/year.