Help! YBS tell me I can port mortgage, then tell me I can't for some bizarre reason

moneymark

Hello,

Advice needed please...

I own a property with a market value of £575k and an offset mortgage of £172k with the Chelsea Building Society / Yorkshire Building Society fixed until 2020.

I want to keep this mortgage as the early repayment charges would cost me £7k!

I would like to convert this property into a buy to let, then port my current mortgage to a new property worth £385k and pay the balance in cash.

Having read the t's&c's and spoken briefly to the lender I was told I could move the mortgage, no problem.

However, if I plan to retain the current property under a buy to let mortgage they will not allow me to port the mortgage.

They say their lending criteria stipulates when porting a mortgage, the value of the new property must be higher than that of the old property.

For example -

Current property worth £575k, new one £600k porting is fine.

Current property worth £575k, new one £385k porting not allowed.

I find this a bizarre rule but I'm told the underwriters will make an exception in certain circumstances, however they won't tell me what they are?

Any ideas as the best approach to take / what i should say would be greatly appreciated.

Thanks in advance

Mark

ACG

Will they give you consent to let?

Thrugelmir

moneymark wrote: »

They say their lending criteria stipulates when porting a mortgage, the value of the new property must be higher than that of the old property.

For example -

Current property worth £575k, new one £600k porting is fine.

Current property worth £575k, new one £385k porting not allowed.

I find this a bizarre rule but I'm told the underwriters will make an exception in certain circumstances, however they won't tell me what they are?

Any ideas as the best approach to take / what i should say would be greatly appreciated.

Thanks in advance

Mark

You are removing equity to fund a BTL. From a lenders perspective this increases the risk to them. Nothing personal in the decision purely commercial. Lending policies and criteria are set at board level not by individual application.

moneymark

ACG wrote: »

Will they give you consent to let?

They have agreed the consent to let so I have the option of leaving the mortgage as is but it leaves me short

However the plan was to raise another £85k needed to buy the other property from the BTL mortgage.

ACG

Raise that as a residential Mortgage on your new one? It avoids the need for ERCs. It may not be what you wanted, but it avoids a £7k ERC.

moneymark

ACG wrote: »

Raise that as a residential Mortgage on your new one? It avoids the need for ERCs. It may not be what you wanted, but it avoids a £7k ERC.

I'm not sure what you mean?

pathtofreedom

I don't think they do BTL mortgages, so you could port it to move house, or you could extend the loan on your current place to raise a bigger deposit for your btl as ACG suggests. Then use that deposit to buy you btl with a different provider.

I am porting mine right now, but as this will be my only residence it isn't a problem.

Don't forget about the stamp duty and tax changes coming in from the 1st of april for btl's as that might not make your business viable any more.

ACG

Speak to a broker, there could be options without having to pay the £7k charges.

moneymark

pathtofreedom wrote: »

I don't think they do BTL mortgages, so you could port it to move house, or you could extend the loan on your current place to raise a bigger deposit for your btl as ACG suggests. Then use that deposit to buy you btl with a different provider.

I am porting mine right now, but as this will be my only residence it isn't a problem.

Don't forget about the stamp duty and tax changes coming in from the 1st of april for btl's as that might not make your business viable any more.

Raising the mortgage on my place still won't give me enough. They won't allow me to port the mortgage to a new house if the value of the new place is less than the current one even though the LTV is in the same bracket.

amnblog

Why would they want to downscale their security?

moneymark

amnblog wrote: »

Why would they want to downscale their security?

But why is there more risk, I'd still be putting a deposit of over £200k on the new place.