Please help porting mortgage advice!

baz9239

Hi, I wonder if someone could give me some advice please?

Situation - I currently have a £80,000 mortgage with Abbey which I took out 3 months ago fixed for 5 years at 5.44 %. My house is worth between £170,000 - 180,000 and should sell very easily.

I have seen a house on the market for £215,000 which I absolutly adore and know is worth more than the asking price (current occupiers are splitting up and are desperate to sell, have reduced price from £225 ,000 according to property snake too!)

I earn £30,000 a year. my only debt in addition to my mortgage is a flexible loan with Egg for £10,800 which I would like to pay off if possible.

I believe my mortgage with Abbey is portable but how do I go about this and is it viable on my income to raise the extra? I could easily afford £300+ per month on my mortgage repayments.

Any advice much appreciated.

p.s . sorry if this is coverd elsewhere but I did do a search! I haven't posted many times but have been a huge fan of Martin and moneysavingexpert.com for several years and never do anything without consulting the site! Cheers Martin :beer:

homer_j_3

first question would be - will your lender be prepared to lend you the mortgage amount you require?

If your house is worth say 170k and you owe 80k then this leaves you with 90k equity. You will have to deduct the following from the gross equity:
Estate Agent fees (1% + vat = approx 2k)
Legal fees for selling and buying (approx 1.5k)
Stamp Duty for buying (2.25k)
Egg Loan if you want to repay that (11k)
Survey fee for new house (0.4k)
Lenders fees/trasfer costs with lender (if not added).

I work that to be somewhere around the 16-17k mark for costs and getting you completely credit free. 90k-17k = 73k

House purchase = 215k - 73k deposit = 142k mortgage.

142K divided by 30k gross salary = 4.73 x salary. I believe that this is stretching your income but Abbey may lend that amount. You will need to work out your budget as I believe that £300 per month will not be enough - unless you meant 300 more than your current payment

baz9239

Hi thanks so much for your reply.

I haven't made any enquiries wih my current lender as yet as I wanted to try and get my head round how this might work.

I did mean that £300 on top of my current mortgage payment would be fine. Looking on the Abbey website I think they would only lend 4 x my salary as I earn under £35,000, although with bonuses my annual salary is more like £32,500 and I do believe I could sell for more than £170,000 and maybe buy the new house for £210,000 but obviously this is just speculation.

I also do live with my girlfriend but it is my house and she has a history of bad debt so very much doubt they would include her on the mortgage as she is currently involved in a IVA.

Maybe I am being too ambitious but thanks for your advice!

MarkyMarkD

I certainly hope that Abbey will lend you the extra amount you need. But otherwise you are in danger of falling into the "portability" trap - i.e. you can probably sell your house, and buy it with a mortgage from someone, but your current lender might easily NOT stretch to the income multiple you need.

With the benefit of hindsight, you were mad as a hatter to remortgage to Abbey 3 months ago if there was any possibility of you needing to move. Portability is of limited benefit as it's completely useless if you need to stretch your income or if any of lots of other circumstances arise.

baz9239

Thanks, but if I understand correctly do you mean that I can only borrow the extra I need from my existing lender? i.e I can't port the £80K mortgage and borrow the rest from another lender? sorry if thats a stupid question but I'm not that clued up in this field!

JoeK_3

There is no guarantee that you will be able to take full advantage of the portability option under the Abbey mortgage, as it will be fully underwritten again by Abbey.

If your income has reduced since your last application, then you may even have to reduce the mortgage amount.

Speak to Abbey about your plans first before you even start the moving process, as it could save you a lot of money, wasted time and effort.

JoeK

homer_j_3

baz9239 wrote: »

Thanks, but if I understand correctly do you mean that I can only borrow the extra I need from my existing lender? i.e I can't port the £80K mortgage and borrow the rest from another lender? sorry if thats a stupid question but I'm not that clued up in this field!

You could port just the exisiting loan and top up with a secured loan for the rest but as the Abbey will have 1st charge on your property, you will need to find someone who will be willing to sit behind the abbey on the deeds. You will also need the consent from abbey for this.

You would be best asking the abbey for the full amount.

MarkyMarkD

Taking the two elements from different lenders will definitely not be best value.

baz9239

Thanks guys appreciate it. Will speak to Abbey and go from there!!

tumtum141

Hi could someone please enlighten me to what it actually means to port a mortgage. I currently have £40000 left on my mortgage, and found a property for £27000. Does it mean that the £40000 is paid towards the amount leaving £230000 to pay. (does this make sense?)
Please please someone put me out of my misary and explain how this actually work.
Thank you

duarab

porting with abbey? good luch there a shower of ####, probably say no just so they can take your exit fee.