Porting Mortgage Confussion

3smees23_2

Hi all,

I'm confused with how porting a mortgage works regarding money paid off from the existing loan. I'm just not sure where and how they include this sum in their calculation? Is this not even taken into consideration as even though it's technically ours, it is still within a 5 year fix?

So....

Current House
Cost - £250k
Sell price - £365k
Mortgage when purchased- £150k
Current outstanding Mortgage £139.4k

New House
Cost -£425k
Fees - £15k
Money kept aside for Refurb - £50k

What would the additional mortgage required be? I just don't where the £10.6k comes into it.

Many thanks

Sam

Thrugelmir

The balance on your existing mortgage at the date of completion is the amount that gets ported.

Any amount above this that you borrow to fund the purchase will be a new sub account of the mortgage.

kingstreet

You have equity in your current home of £225,600 after it is sold and the mortgage repaid.

After you take out your £65,000, that leaves £160,000. Leave out the £600 for now!

You want to buy for £425,000 less your £160,000 equity means a new mortgage of £265,000.

If your current lender agrees to this, you then port the rate from your old mortgage to the first £139,400 of the new mortgage and the residue, £125,600 will be offered on one of the lenders current products.

You can normally have the mortgage over a new term, say 25 years and it will be split into two sub-accounts, one for the original mortgage terms you've ported, another for the increased borrowing.

3smees23_2

Thanks both, I managed to find another forum where the same question was asked. I didn't realise that when you port the existing mortgage it is in effect paid off, then you just use the rate on the same amount of money for the next property.

Thrugelmir

The term mortgage relates to the legal charge placed on the property to secure the debt. The actual product is a loan like any other.

RavingMad

Just wondering if LTV has to be taken into account?

The original house was bought with a 40% deposit it looks to me but you're not putting that percentage into the new house. Assuming the product was only available to you at that LTV, can the old rate be ported?

kingstreet

Yes. The LTV will determine only the rate for any increased borrowing.