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Selling house/Porting mortgage
Hxnnxh
Posts: 8 Forumite
I really don't know a whole lot about mortgages, so please excuse my ignorance!
We bought our first house in Feb this year. The house cost £181,500 and we got a 95%, 25 year mortgage from Nationwide. The mortgage has a two year fixed interest rate. If we pay it back before Feb 2017 we have to pay a 2% early repayment fee.
We were far too hasty in purchasing the house, we didn't research the area enough and are not happy living here. We would really like to move.
The mortgage does have a 'porting' option. I spoke to Nationwide over the phone and they explained that we could move over the £172,425 to the new property (if it met their criteria etc) and if the house cost more than the £181,500 our first house cost we would essentially have to take out a new part of the mortgage under the same terms as our first mortgage (5% deposit, 25 years) but the interest rate could be different.
I understand that part. What I don't really understand is what happens if we sell our house for £200,000 (current estate agent valuation) and port the mortgage? Do we have the option to take the £18,500 that we have made on the house and keep it, or does it automatically get taken by Nationwide to pay back part of the mortgage? If the bank takes that, does that mean we would pay early re-payment fees for paying some of the mortgage back?
As far as I understand it, its going to be an expensive decision to move (solicitors fees, estate agent fees, mortgage product fees, deposits, stamp duty!) but if we could get that £18,500 that we had made on the house, it would definitely make it a lot easier financially.
I don't think we would have too much trouble getting the mortgage approved. When we bought our house they offered to lend us £243,000, and my salary has gone up by £10,000 a year now.
Any advice would be so appreciated, especially if you've done this before!
We bought our first house in Feb this year. The house cost £181,500 and we got a 95%, 25 year mortgage from Nationwide. The mortgage has a two year fixed interest rate. If we pay it back before Feb 2017 we have to pay a 2% early repayment fee.
We were far too hasty in purchasing the house, we didn't research the area enough and are not happy living here. We would really like to move.
The mortgage does have a 'porting' option. I spoke to Nationwide over the phone and they explained that we could move over the £172,425 to the new property (if it met their criteria etc) and if the house cost more than the £181,500 our first house cost we would essentially have to take out a new part of the mortgage under the same terms as our first mortgage (5% deposit, 25 years) but the interest rate could be different.
I understand that part. What I don't really understand is what happens if we sell our house for £200,000 (current estate agent valuation) and port the mortgage? Do we have the option to take the £18,500 that we have made on the house and keep it, or does it automatically get taken by Nationwide to pay back part of the mortgage? If the bank takes that, does that mean we would pay early re-payment fees for paying some of the mortgage back?
As far as I understand it, its going to be an expensive decision to move (solicitors fees, estate agent fees, mortgage product fees, deposits, stamp duty!) but if we could get that £18,500 that we had made on the house, it would definitely make it a lot easier financially.
I don't think we would have too much trouble getting the mortgage approved. When we bought our house they offered to lend us £243,000, and my salary has gone up by £10,000 a year now.
Any advice would be so appreciated, especially if you've done this before!
0
Comments
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The sale proceeds will be used first of all to pay off your existing mortgage on your current house. The residue after the solicitor has settled all claims on the money is yours to do with as you wish.
Since you wish to port your existing rate, the £18,500 can form part of your new deposit on your new house with a new mortgage (at ported rate) at £172,425.
If you don't need to use all the £18,500 to meet NW's deposit requirements, then the balance will be in your pocket.0 -
TrickyDicky101 wrote: »The sale proceeds will be used first of all to pay off your existing mortgage on your current house. The residue after the solicitor has settled all claims on the money is yours to do with as you wish.
Since you wish to port your existing rate, the £18,500 can form part of your new deposit on your new house with a new mortgage (at ported rate) at £172,425.
If you don't need to use all the £18,500 to meet NW's deposit requirements, then the balance will be in your pocket.
So, if we sold the house for £200,000, bought a new house for £220,000 and ported the mortgage over, we would need a 5% deposit for the extra £38,500 which would be £1,925. Ok, thats good to know about the extra being in our pocket!
We would need to save for solicitors fees, stamp duty, estate agent fees and mortgage fees beforehand though wouldn't we?0 -
New house £220k
5% deposit £11,000
Mortgage (95%) made up of:
Ported Rate....................£172,425
New mortgage product.....£36,575
So, assuming NW will lend you £209,000 then you could have £7,500 to go to all your other costs that you list.0
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