Portable mortgage/can't seem to move

Raffers

EDIT: *I;ve just realised that this might be better in the Mortgage thread, if an Admin wants to move it*

I wonder if someone can clear up this point for me.

I have a repayment mortgage of circa £87K against a house worth £150-160K. I manage the repayments fine and have lived here for 7 years. There is 12-13 years left on my term.

I'm looking to move house. To something that doesn't necessarily cost any more than what I have - just with a different layout.

I was of the understanding that I could port my mortgage to the new property, thinking that I use the house sale equity of circa £60-70K and continue with the same level of mortgage on the new property.

My current provider tells me that its the package, not the mortgage, that's portable and that I have to go through their standard eligibility checks for lending.

Here's my issue. I currently earn £22K (whilst I'm also studying) which I had assumed would allow me to comfortably borrow £88K - being approx the value of my current mortgage. But their online eligibility calculator throws out some very modest figure of circa £30K !

I am comfortably managing to pay back my current mortgage and have never missed a payment in 13 years. Am I unable to move anywhere else, as the eligibility calculator will fail me at every hurdle? I don't understand how I can be paying the mortgage on this place with no issue but can't move to an equally-valued new property and not get the borrowing?

SplanK

I assume you are on a fixed rate mortgage?

Raffers

Yes I am. The fixed rate ends in Dec 2015.

When my prev fixed rate ended, I didn't have to go through the eligibility check to secure this fixed rate. As I was already a customer with a good record, I was able to take on a newer fixed rate (i.e. the one I'm on now).

SplanK

Yes, what happens is your existing mortgage is paid off, but the port means that there is an agreement that if you take a new mortgage from them then they will not charge you an early repayment charge.


You still need to apply as though you were doing it from scratch, and still need to meet the lenders affordability criteria, earnings and what not checks.


Your new mortgage is then split into 2 chunks (if the same deal as now is not available). Sub account 1 will have your existing mortgage, and the same rate, same fixed term deal as you have now. Sub account 2 will additional funds you need to purchase your next house, but they will be at a new rate (if fixed, it will run independently to the one you have now) I would assume if you do not need any additional funding then there will be no additional sub account.


Renewing your fixed rate with your current lender is a different task altogether.

G_M

Lending criteria may be different to what they were when you originally too out the loan. You'll have to meet current criteria on the new property.

mrginge

Raffers wrote: »

Yes I am. The fixed rate ends in Dec 2015.

When my prev fixed rate ended, I didn't have to go through the eligibility check to secure this fixed rate. As I was already a customer with a good record, I was able to take on a newer fixed rate (i.e. the one I'm on now).

Taking a new product on an existing mortgage doesn't require affordability checks.

Buying a new house does. Mortgages themselves are not portable, you port the associated rate across to your new mortgage, for which you must pass the lender's current affordability rules.

Raffers

OK thanks for that mrginge & SplanK. I suppose that means then that I can keep living in this same house as long as I can keep taking out new products from my current provider, but that I'm unable to move to another property of similar value without the affordability checks. That's scuppered my plans. Its like effectively saying that I can't move house.

SplanK

Have you had a conversation with your existing lender about it rather than just about the porting? Online calcs are not perfect and may not take all things into consideration. Although if you have other loans, or unpaid credit cards, or dependants then it wont help....