Portable mortgage but is this correct?

pamelab21

Looking to put our house on the market in jan and have been in touch with our current mortgage provider Britannia, they have said that our mortgage is portable with a small fee but they would basically charge us a full redemption fee (2k) which would then be refunded to us within 6 months of moving. Is this correct? Surely if a mortgage is portable and we pay the fee then we shouldn't have to stump up for the redemption fee when we are moving with them?

Thrugelmir

Are you proposing to sell your existing property and purchase the new one at the same time?

Contemptuous

Do they mean you have six months between redemption of your existing mortgage and completion of the new mortgage, during which you would be eligible for a refund of the early repayment charge? I can't imagine the refund itself would take 6 months to process..

kingstreet

First thing, a mortgage isn't portable.

When you sell your current home the loan is repaid and the mortgage cancelled by the solicitor handling the sale.

If you are taking a new mortgage on a new property with the same lender, portability allows you to take the new loan on the same rate you've given up on the old loan you're repaying. You have to qualify for that new mortgage, there is no guarantee.

If you are borrowing extra money for your new purchase, this is normally given on one of the lender's current products.

Porting the rate normally has to be concurrent. The sale and the purchase have to take place on the same day. Normally, if sale & purchase are concurrent, the penalty isn't charged.

However, when these aren't concurrent, some lenders will charge any early repayment penalty on the sale being completed and the loan being repaid. Then, provided the new mortgage starts within a set timescale, the penalty is then refunded.

Only the lender concerned can confirm its policy to its borrower.

pamelab21

The plan would be to buy and complete our sale on the same day. I did tell them that but they did say we would be charged a redemption fee and they would refund it within 6 months of our moving day.

amnblog

I suspect this is simply miscommunication.

If you buy and sell on the same day no redemption is charged as the product effectively stays active moving with the new mortgage to the new property.

If the new purchase is delayed, the typical approach from a lender is to charge the redemption penalty when the current mortgage closes - then offer the original product for a new purchase within 6 months. They refund the redemption penalty when the product is picked back up.

Call your lender again and ask them to clarify.

kingstreet

I agree.

This is one of those "call three times, get three different answers" situations you get with lender call centres.

Put a written request in to Leek (presuming they are still there?) and see what they send you back in writing.

Thrugelmir

amnblog wrote: »

I suspect this is simply miscommunication.

If you buy and sell on the same day no redemption is charged as the product effectively stays active moving with the new mortgage to the new property.

If the new purchase is delayed, the typical approach from a lender is to charge the redemption penalty when the current mortgage closes - then offer the original product for a new purchase within 6 months. They refund the redemption penalty when the product is picked back up.

Call your lender again and ask them to clarify.

Maybe a technicality as the new mortgage will be with the Co-Operative (under the Britannia brand) rather than the old Britannia mortgage book. So there's internal administration to be performed. That shouldn't directly impact the OP.

pamelab21

thanks all. I did find it all a bit odd and asked him again and he repeated the same thing.
I will ask again just to make sure. But yes, feels a bit like calling DVLA where you get a different answer everytime you call!