Mortgage Porting Question

chieftains

Hi,


Could someone please help me with Mortgage porting. We have an appointment with Nationwide in a few weeks but I would like to try and get my head around it.


We bought a house for £135,000 two years ago on a 30 year mortgage (4 year fixed rate). The deposit we put down was £32,500 and we have approx. £98,000 left on our Mortgage. The house is now worth approx. £180,000 to £190,000.


We are looking to buy a house that is worth approx. £275,000. How does the porting, money we have made on our current house etc. work?


Thanks for your help :-)

libf

The amount you have currently borrowed is re-lent at the same rate you have now. Any additional borrowing will be at a new rate.

The difference between what you sell at and the value of your current mortgage is your deposit, plus any other money that you want to put in, but you'll need money which isn't tied into the house for moving costs.

amnblog

Always remember that porting means they are simply offering you the option to retain the funds you have on the rate you have.

They are not guaranteeing you lending - the whole lot will be unwritten as a new case based on your current situation and the lenders current criteria.

chieftains

Thanks amnblog - Yes we are aware of this. I do not think that we will have any problem getting a new Mortgage. Our wages have increased since we bought our first house and at the time they were willing to offer us well over £200,000.


We are just a bit confused on how the porting process would work.


Would our mortgage stay the same and then there will be a new mortgage for the extra money needed? Where does the money that we have made on the house go?

libf

See above.

amnblog

When you sell your current home for say £180,000, the current £98,000 mortgage is repaid leaving you £82,000 from which you pay any sales costs.

The balance is available for you to spend, save, or put into your new home as a deposit.

If you now buy at £275,000 and put say £68,750 down as a deposit, you need a mortgage of £206,250.

Nationwide will put £98,000 back on your current rate and offer the extra £108,250 on a new rate from their current range.

I hope that makes sense.

chieftains

Thanks Amnblog - That makes sense!

Zogger

amnblog wrote: »

When you sell your current home for say £180,000, the current £98,000 mortgage is repaid leaving you £82,000 from which you pay any sales costs.

The balance is available for you to spend, save, or put into your new home as a deposit.

If you now buy at £275,000 and put say £68,750 down as a deposit, you need a mortgage of £206,250.

Nationwide will put £98,000 back on your current rate and offer the extra £108,250 on a new rate from their current range.

I hope that makes sense.

Apologies for hi-jacking but I'm with nationwide in a similar situation - so basically you have two different rates with two different fixed terms.

My question is, after the porting is done, once you reach the end of the original fixed term, do you then have to remortgage the original amount to get a better rate? or can they be somehow merged?

For example I took out a 5 year fix in November 2011 at 3.69%, meaning by the time I move there will be less than a year left on my mortgage. However I believe there is a 5% ERC (rather punitive considering how interest rates turned out in the end, but I did agree to it! I really regret the 5 year fix)
I'd be looking at borrowing about 125000 on top of my currently remaining 122000, but this could have a lower rate of say 2.05% based on their current product range

Presumably I would have to pay booking and product fees on the new borrowing. But the porting itself would not involve fees. Then in Nov 2016 when the old fix ends, I would have to pay product fees again to move that borrowing to a new deal? And again when the other deal ends etc. etc. on the two products ad infinitum?
Is that right or am I missing something?

Thanks [yes I should book an appointment with them really]

amnblog

Part of the problem is that the two parts of a ported and topped up mortgage never 'merge' without cost unless the first rate to expire is left unchanged until the second rate expires.

Two chunks of lending. Two booking fees.

No wonder Lenders offer porting.

Zogger

thanks, it occurred to me that the best option for me with a limited term left is probably to take a 2 year tracker or perhaps even better the 3 year flexclusive tracker on the new borrowing, which has no booking or product fee and no ERC.
Then if I want to fix the whole amount, wait until there's 3 months left on the original deal to reserve the rate for the full amount (or if that's not possible wait until November 2016). The additional risk here being a rise in rates, but [crystal ball activated] I suppose it's not likely to be a huge amount in that timescale