Porting or Redeeming

ChrissieS_2

Hi folks

I'm selling my 1-bedroomed flat and hoping to move to a 2-bedroomed flat on t'other side of the city. I'm in north Bristol and want to move eastside.

Mortgage isn't up until March 2018 and my redeeming costs are £3,007. (Flat is probably worth £150k which is bottom rung of the ladder in this city.)

Porting seems to mean a first and second charge. £60k still to pay at old rate and a bit more to borrow on a new rate. I guess these 2 things will run separately but not alongside as would have different start dates.

I don't know what to do. Help! Ideas and comments please.

kingstreet

No. It's a single first charge.

Your existing mortgage is repaid from the sale proceeds and you arrange a new mortgage for the full amount you need to borrow.

The old rate is ported to the new mortgage with the increase i borrowing offered on one of the lender's current products.

You end up with one mortgage, one charge and two sub-accounts to represent the different amounts at different rates.

This is because you port the rate from one mortgage to another. You do not port the mortgage from one property to another.

Run a penalty-free tracker alongside what you have now and you can go for customer retention products on both sub-accounts at the same time when the first tranche ends.

ChrissieS_2

Thanks for explaining that Kingstreet. I did email my mortgage adviser but I don't think I explained myself properly. Maybe that's what you do for a job ... ? :0) You understood my question v well.

So it's working out what's better in the long-term really and minimising the loss if I redeem? Bristol's property market moves very quickly and I can lodge with a friend eastside if I don't find somewhere to move to after selling.

kingstreet

30+ years mortgage broking and 30,000 posts on here and you get to be able to understand what people are asking without them being mortgage brokers.

I'm supposed to know my job.

People think you can port a mortgage... you can't.

Yes, you need to weigh up paying the ERCs and going for a new mortgage against porting the rate to avoid them.

However, if you have a break in ownership, you may have that choice taken away. You need to establish your lender's policy on non-simultaneous sale and purchase.

ChrissieS_2

I missed your tagline. Doh! I see you are indeed a mortgage adviser. Thank you.

6 months is the current lender's non-sim offer.

In your message about looking at a tracker for comparison, what is the tranche period you refer to>

kingstreet

If, for example, your current offer ends in March 2018, you could get a two year tracker for the increased borrowing and when the former ends, you can also get a new rate for the latter as it's ERC-free.

Obviously, your lender has to offer such a product.

bigstevex

How does it work when your LTV changes,

Currently have a 1.99% deal due to ~65% LTV, however if we move house and port current product we'd move to an 82% LTV, do we still get to keep the 1.99% deal as a sub account even though it should be more like 2.5% for example for that LTV?

glosoli

The lenders I am familiar with will allow this, essentially you could port across a 60% product to a 90% LTV new purchase.

kingstreet

bigstevex wrote: »

How does it work when your LTV changes,

Currently have a 1.99% deal due to ~65% LTV, however if we move house and port current product we'd move to an 82% LTV, do we still get to keep the 1.99% deal as a sub account even though it should be more like 2.5% for example for that LTV?

Yes.

The new product for the increased borrowing reflects the LTV, not the ported rate.

getmore4less

Its a number crunch if your lender will let you port.

Start with port + best the lender will give you on the extended borrowing.

That's the benchmark against same mortgage+ ERC+extra costs on a single product from your lender or another one.

With two small bits against one big bit you may be into fee no fee being best

When it comes time to switch £60k will probably be a no fee switch but £60+ extra(how much?) may be a fee deal is best.

it may be that having two products running on different time lines won't be any more expensive than a single product.

Other factors, does the current deal have a good follow on rate that might be worth keeping could swing to porting. even if there are cheaper short term options.

Do you plan to overpay on your standard term, that changes the numbers.

If you say which lender, what product you currently have, how much extra you want to borrow, target LTV an example can be done based on their current offers.