Mortgage porting and topups

antuk

Hi all,

Im in the process of selling and buying a new house which will be more expensive. My current mortgage still has a year to run on the fixed rate so I understand that I would need to take out any additional borrowing with the same bank at the current rates.

I have a couple of questions im hoping one of the mortgage brokers on these boards will be able to answer for me.

1. If I take a new fixed rate for the additional borrowing, what happens when the fixed rate of the original mortgage expires? I assume my options are to apply for a new deal with the same bank or switch to SVR as I assume you cant re-mortgage just part of the house?

2. How do monthly payments (and overpayments) get allocated when you have essentially two mortgages on different interest rates? Is it split evenly, or highest interest rate paid off first etc.

Thanks,

anselld

I guess the reason there were no replies last time you posted is that we cannot see the terms of your mortgage or even who the lender is.

Porting and additional borrowing are different for each lender. The lender is therefore the best person to ask about their rules.

antuk

I was after more general rules rather than specific rules to the bank (which is nationwide if that helps) - wanted some idea of the general principle before i speak to the bank

Thanks,

Thrugelmir

You'll have one mortgage that has 2 sub accounts. The account with the ported balance and the new borrowing. The repayments on each will be calculated independently. Depending on the product etc. The sub accounts could even have different expiry dates.

As a rule when fixed term or special rate products end then the default is the SVR or the rate as specified by the product terms.

In NW's case they operate 2 SVR's, the SMR and BMR. So worth checking which rate applies to your existing product. The BMR is guaranteed never to rise more than 2% above BOE base, so currently 2.5%. Whereas the SMR is currently 3.99%.

antuk

Thanks Thrugelmir

I assume that with the two sub accounts, I would need the fixed rates on both to expire before I could remortgage to a different bank (or pay the exit fee) - ie I assume you cant split the mortgage over two banks?

Thanks again

Thrugelmir

No you can't split the mortgage. As mainstream lenders require first charge (the mortgage) on the property. Hence why secondary lending is called secured, and interest rates are higher. As the lender ranks second behind the first charge holder.

To avoid ERC's, mortgage products do have to be outside any fixed term period.

Even if you remain with the same lender. Consolidating the sub accounts back into a single account can be a pain.