Mortgage porting for dummies

pasul

Hi everyone its my first post and i need a bit of an explanation of mortgage porting. I'll give some non specific details first.

I currently have 2 years left on a 25 mortgage with the co-op we are on a really good rate till the end of the mortgage.

We are looking to move and take the mortgage with us i know is called "porting".

We have 32k left to pay on an endowment and interest mortgage.....possible small shortfall but that OK.

Our house is worth approx 160k for a quick sale. So we have a deposit of 160k on a new house (bought house for 40k)

House we are looking at is 240k asking price, so we want to borrow 130k to include a serious modernization plan on the new house.

We obviously need to pay the balance of what we owe on our existing mortgage. This is where i'm confused! If we port does this get added to the 130k we want to borrow? Which really means we are paying the interest twice?

My missus sort's the money stuff out, but i though at 46 and 3/4 i should maybe start to understand where my wage goes:o

Paul

dimbo61

You still owe £32K and the endowment MIGHT pay that off in 2 years?
Have you checked the endowment recently ?With the size of new mortgage you are looking at you might be better off looking for a new deal with a Long term fix of say 5 years ( long term security)
If you can keep the endowment and use that in 2 years to pay down some of the mortgage debt( most fixed rate deals still allow 10% overpayment)
OR consider an OFFSET mortgage to keep funds in the offset account to pay for work as and when needed.
It might be worth cashing in the endowment but that is another story

Annisele

pasul wrote: »

We have 32k left to pay on an endowment and interest mortgage.....possible small shortfall but that OK.

Our house is worth approx 160k for a quick sale. So we have a deposit of 160k on a new house (bought house for 40k).

House we are looking at is 240k asking price, so we want to borrow 130k to include a serious modernization plan on the new house.

I think you might be getting confused around the bolded bit (unless you have £32k in savings).

Assuming you have enough savings to cover fees but nothing else, if you sell for £160k, then you'll only have a deposit of £128k - that is, the amount you got from your sale less the mortgage amount. If the new house is £240k, you'll need to borrow £112k just to buy it (£240 - £128 = £240). If you borrow £130k, then that would be £112k towards the purchase and £18k for the modernising.

pasul

dimbo61 wrote: »

You still owe £32K and the endowment MIGHT pay that off in 2 years?
Have you checked the endowment recently ?With the size of new mortgage you are looking at you might be better off looking for a new deal with a Long term fix of say 5 years ( long term security)
If you can keep the endowment and use that in 2 years to pay down some of the mortgage debt( most fixed rate deals still allow 10% overpayment)
OR consider an OFFSET mortgage to keep funds in the offset account to pay for work as and when needed.
It might be worth cashing in the endowment but that is another story

The endowment at last statement was showing a possible shortfall of 3 to 5k which we can cover with savings.

I think you might be getting confused around the bolded bit (unless you have £32k in savings).

I don't have 32k savings and as i said in my o/p i know that we have to pay off what we owe but wasn't sure about what happens to the amount we owe if we were to consider porting the mortgage. We are still weighing up our options at the moment.

Annisele

Technically, you don't actually port the mortgage - you port the interest rate. (I wish it was called "porting a rate" rather than "porting a mortgage", that would save a lot of confusion!)

If you do port, you'll end up with two sub-accounts*, or two parts to your loan. It will still be a brand new mortgage loan, with a brand new mortgage application, but you'll keep your existing interest rate and term on the £32k. Does that help at all?

(*Different lenders do things slightly different, but you might as well think of them as subaccounts).

antrobus

pasul wrote: »

....I currently have 2 years left on a 25 mortgage with the co-op we are on a really good rate till the end of the mortgage.

We are looking to move and take the mortgage with us i know is called "porting". ....

The first thing you do is contact the Co-Op Bank and ask them whether you can 'port' your mortgage. The answer might be 'no', and even if the answer is 'yes', it will only apply to the £32k balance that you currently have outstanding. 'The "really good rate" that you currently have likely won't apply to any additional borrowing, nor will it apply beyond the two years that you currently have left.

johnspurs2

I am confused as well. I have 52000 left on my present mortgage. The property I am buying is 71000. I have been told that I can port my mortgage. I am selling my property for 115000. How much will i need to pay the bank when i sell my flat to have a mortgage of 33000

Thrugelmir

Excluding any fees or legal costs.

Existing Property £115k less £52k = £63k equity.

New Property £71k -£33k mortgage = £38k of cash

Equity left = £63k - £38k = £25k - Costs of sale and Purchase = £??