Will this work?

jimpix12

Hi all,

I have a property that is mortgaged with approximately 50% LTV by Coventry BS.

I have seen another home that I really like and originally planned to offer cash for, which I could just about afford if they took an offer.

My plan was then to put my existing mortgaged home on the market and then transfer the mortgage over once sold. However it transpires that Coventry BS won't allow this as the new property will be "owned outright" and its against their T&Cs. Drat!!!

Is there any way around this or another crafty way to do it? I've been racking my brains. Please give me hope! :money:

anselld

Port the mortgage when you buy the new place then sell the old place.

jimpix12

Thanks... I think I get what you mean. I'll use a worked (wishful!) example because I'm still not 100% sure if this is correct...?

Let's say my current place is worth £400k and, of that, I've got £200k in equity + £200k as mortgage debt.

So I then 'port' the £200k mortgage over to the new place. Let's say the price of this is £800k.

This then reduces the amount outstanding (£800k-£200k) to £600k. I then clear this £600k with cash savings, leaving a £200k mortgage on the new place, the same amount as was on the previous property.

Finally my current place sells for £400k (the market value) and I pocket the £200k equity. Is that right? I think I'm missing something. Presumably the old place would need to be sold before all this can happen.

TrickyDicky101

No - you have enough cash at present to purchase the new place outright.

Hence:
Agree purchase price of new place and establish with current lender you can port current £200k mortgage rate to new place
Use £200k of your savings to clear outstanding mortgage on current property (so it becomes mortgage free) at the same time as you complete on new property (which you will be buying with mixture of cash plus £200k mortgage from existing lender)

Effect: £200k of mortgage moves from old to new property. You then have a mortgage free property to sell and you keep the entire £400k.

jimpix12

Edit: Got confused, think I understand now. Thanks.