Porting & Early Repayment prior to moving

whiteheadrupert

Hi there,
Myself and my wife are planning on moving in the new year. We're coming up to one year in our current two year fixed rate contract with Santander, interest is 2.09%, outstanding balance of £97k with property valued at £210k. We were looking at properties in Scotland ~£300k with around a 100k deposit.

In terms of ease, we were hoping to port the mortgage, as early repayment charge would be ~3k and I don't think we could get a much better rate than 2.09% currently. From experience, is the porting process the same as previous mortgage applications in terms of paperwork, documents required etc? I'm aware that completion of buying/selling have to align on the same day to waive the early repayment charge. Other than that caveat, overall, is porting all that much easier? Anything to look out for?

Additionally, we were hoping to do our annual early repayment, as we're allowed to repay 10% without fee - does it make sense to do another lump sum into the mortgage when we're planning on moving in the next six months, or does it make more sense to keep that money liquid and in our current account in case of unexpected costs?

Sorry if these are basic questions, this is our first prospective buying and selling experience, and it's much more complex than our time as first time buyers! Thanks in advance - even if no clear answers, peoples experiences of porting, particularly with Santander, would be appreciated.

Thrugelmir

The term porting simply relates to the existing terms and conditions i.e. interest rate, product, mortgage term. In all other respects it's a new application. That will need to met the lenders current criteria at the time of application.

Whether you should overpay or not is really down to you. As is highly dependent on your personal finances and circumstances. If in doubt perhaps don't overpay by the full 10%.

whiteheadrupert

Thanks for your quick response, much appreciated - we wouldn't be impacted greatly financially or at particular risk if making the overpayment, but I just wondered if there were any downsides to tying it into the mortgage prior to a move.

Thrugelmir

whiteheadrupert wrote: »

Thanks for your quick response, much appreciated - we wouldn't be impacted greatly financially or at particular risk if making the overpayment, but I just wondered if there were any downsides to tying it into the mortgage prior to a move.

None as such. If you are paying more interest than you are earning then a sensible move. Ultimately will reduce the mortgage term as well.

erin110

Yes, you can get lower rates than 2.09% MUCH LOWER however, due to the size of your early repayment I don’t expect it will be worth moving. Just have a look at your existing lenders website and look at what rates they are offering at 70%, you will be surprised. I say 70% as based on purchasing at £300k and borrowing just £200k your loan to value comes in at around 66%.
If lower rates (short term products) will suit your needs, then it may be worth paying off as much as you can without penalty on your current loan as the rate charged on that amount of borrowing will be higher so it would make sense to pay it down.
What some people also do not realise is that when you have two parts to your borrowing which you may have going forward should you port with Santander is that you can actually have a different term on each part. So you could take part 1 over let’s say 15 years and part 2 over 25 years. This will mean you be paying more of the capital without chipping into your overpayment allowance. This will all be subject to affordability but may be worth discussing with your mortgage advisor.