Bad decision when remortgaging and now looking to move

Goldust

Hi,

I did my first ever remortgage just over 3 years ago. At the time I decided to fix in my rate to 3.2% for 5 years. The main reasons were that I didn't want to gamble with a potentially higher rate and had a baby on the way so wanted to be safe in the knowledge my payment would remain the same for the whole term.

So 3 years in and interest rates are still rock bottom so clearly I made a mistake (with hindsight). This is a Post Office mortgage with a 5% early repayment charge so it's not worth me trying to switch out and take the hit to save interest over the next 2 years.

I would like to move house or do home improvements but would prefer the former. I can move and avoid/get a rebate of the ERC if I take another mortgage out within 3 months of selling which seems to make sense. But to further complicate matters, if I want to borrow more to finance a more expensive property it seems like I can do so as a separate mortgage and rate which appear to be lower than my current rate. But these also attract an ERC and would finish at a different time to my current mortgage making it difficult to try to consolidate the two in the future. Also there is a risk I don't get approved I guess...

So my question is really is the above right? I can't get any decent info from PO mortgages and their website is pretty poor.

I'm just not sure what is best to do? Happy to provide figures if that helps...

kingstreet

Yes. You have explained how porting a rate works.

You apply to your existing lender for the full amount you need to purchase your new home. If approved, at completion your current rate will be moved to your new mortgage with any increased borrowing taken on one of the lender's current products.

You end up with a mortgage split over two sub-accounts to represent the two different amounts you have borrowed at different times.

Do a two year fix on the increased borrowing and your whole mortgage should be open to customer retention offers when both tranches end.

Goldust

Thank you. So presumably as my balance reduces each month, the amount at that rate I can move to my new mortgage reduces in line with that?

So lets say I owe £100k on my current mortgage and the house sells for £150k. Therefore I have £50k "cash" to use as a deposit (appreciate there are other charges in this process but just to keep things simple)

I purchase a property at £200k. My £50k cash makes my new LTV 75% and I owe £150k.

The £150k is mortgaged based on:

£100k mortgage at the rate I've ported
£50k mortgage at the advertised rate for someone porting their mortgage and borrowing more based on what they are offering for 75% LTV

Appreciate I've over-simplified the whole process but I just want to check how the port rate / new rate is broken down and that the LTV for the new loan is based on my overall debt/deposit.

kingstreet

That's about right, yes.