Porting and affordability check

Woodypuddy

Hi,
I have been reading lots of recent articles about porting mortgages and that, if you are not wishing to take any more money or change the term of the mortgage the provider should not ask you to undertake an affordability check and that the regulators introduced new guidelines to stop this practice.
Is this correct as I contacted the co-op today about porting but they advised I needed to do the affordibility check as if I was a new application. The co-op were mentioned in the articles as having initially refused existing customers due to the check but reversing decisions when the papers became involved.
I ask as I am guessing that if it is a tick box type exercise I will fail this as I have a DMP (which I intend to pay off with the move).
The co-op also said they don't check your credit file at this point, it is only checked when we do a full application?
Thanks in advance

kingstreet

Porting means a new application which normally involves credit checks and affordability calculations.

The transitional rules to which you refer are not being widely followed by lenders yet. They are awaiting the results of an FCA thematic review later in the year.

mrginge

Aren't transitional rules about remortgaging?
Porting is not remortaging.

kingstreet

If you are downscaling and there's no change to the mortgage amount or loan to value, I can't see why a lender shouldn't apply the transitional rules to a house move, a retention product or a remortgage.

In fact, remaining with existing lender should be a more sensible application of the rules, as it's probably understandable why a new lender wouldn't want to take transitional rules business.

Ggrw104

My husband and i are in the process of porting our existing nationwide mortgage and borrowing 58,000 additional funds. I was worried about the affordability checks, however we were asked the basic questions to obtain the DIP. When it came to the full application we weren't asked a single question about expenses and we only have to send in payslips rather than the previous months bank statements.

If you're just porting then you should be fine, even if you are borrowing additional funds then the application isn't as bad as it could be.

rsbk

I recently enquires about porting my existing mortgage , I'm with the halifax. They ran through the affordability check and credit check then said I could port but would offer 10k less than I already have !!! Porting it seems for me is not an option.

kingstreet

That's because people misunderstand what the word means.

You port the rate from the old mortgage to a new one with the same lender, if you pass the lender's current status, affordability and valuation requirements. There is no guarantee that because the lender lent to you previously it will wish to do so again.

A mortgage is the security, the deed which ties the homeloan to the property in question. When the property is sold, the proceeds are used to repay the homeloan so the mortgage can be discharged.

A new homeloan is then taken for the new purchase and a new mortgage ties the property and the homeloan together.

Too many think a mortgage can be transferred from one property to another and think that is the definition of porting, when it isn't.

WillyWonga

I agree with kingstreet.

Late last year I went ahead and put our house on the market, sold it and reserved a new build plot. Naively I thought because I read the current mortgage was portable and was going for a lesser amount there would be no problems.

I was with Platform (Co-Op). They said had to treat me as new application and even though the figures were the same when applied 3 years previously the new rules meant I couldnt borrow the amount even though it was less than what I currently owed. This set panic bells ringing as wasnt expecting a full on mortgage application. Luckily a decent broker found a lender to match us (Natwest) and all went through ok.

Lesson learnt - do your homework before submitting it!!!!! :rotfl:

Thrugelmir

Woodypuddy wrote: »

I have been reading lots of recent articles about porting mortgages and that, if you are not wishing to take any more money or change the term of the mortgage the provider should not ask you to undertake an affordability check and that the regulators introduced new guidelines to stop this practice.

This is in relation to product switches as to opposed to new mortgages. As vetting existing customers in a sense amounts to discrimination.

amnblog

A rate or product switch is very different from porting.


1. SWITCHING


If you switch your rate, you are not moving, and neither is your mortgage.


2. PORTING


If you are porting, you are moving and your mortgage is ending.


You are settling your current mortgage, yet taking your current rate with you to apply it to your new mortgage.


In the first case (1) the mortgage is unaffected and affordability need not be checked.


In the second case (2) a new mortgage is arranged and must be underwritten in full.


A porting option is not a guarantee that you can move and keep your mortgage, it is merely an option to maintain your mortgage rate subject to underwriting.