Splitting Mortgage Payments with Partner - Porting mortgage

lou1182

Hi

My partner and I are buying a house where each one of us has 50% equity.

The amount of the loan is £380,000. Our plan is to split the monthly payments 50/50 for the next 24 years.

My partner wants to port his old mortgage to the new property, i.e. porting the repayment of £107,196 at 3.34% rate to the new property.

Question 1: Could anyone who has been in a similar position tell us please if it's a good idea to do so? my partner is saying that this will save him 'exit' fees from his old mortgage.
Question 2: Is the 50/50 split of monthly payments still fair to both of us? I'm asking because the mortgage offer shows that:
of the £380,000 borrowed money:
- £107,196 is to be paid at 3.34% rate (the ported portion of the mortgage)
and
- £272,804 will be paid at 1,99% rate

My partner and I just want to make sure that none of us is paying more than they should in this new mortgage.

Thank you!

Linda

getmore4less

when does the ERC finish? (ie how long is left on the fix?)

How big is the ERC.

how does it align with the new part.

LTV

is this the best deal you can get, what if you paid the ERC and combined could you get a better rate from a different lender.

Are you putting in equal deposits?
........................................
by bringing the ERC money he will effectively be gifting you 1/2 that for the rest being on a higher rate.

lou1182

Hi

Sorry I'm not very familiar with the financial vocabulary but I'll try to provide as much information as I can.

The ERC on the first property will finish in 9 years. That's why my partner is saying that the 'exit' fees are quite high, hence the 'mortgage porting' is a better option.

Our deal on the new property is:
- £107,196 to be paid at 3.34% fixed rate for 5 YEARS (This is the ported portion)
and
- £272,804 will be paid at 1,99% fixed rate for 5 YEARS

After the expiry of 5 years, we will switch to a variable rate.

Both my partner and I are putting equal deposits, and intend to split the monthly mortgage payment 50/50.
Actually we do go 50/50 on all life expenses, bills, etc..

<<by bringing the ERC money he will effectively be gifting you 1/2 that for the rest being on a higher rate.>> --> Could you please expand a little more?

Thank you and appreciate your help.
Linda

Tom99

[FONT=Verdana, sans-serif]Sounds like your partner should pay the extra 1.35% on £107,196 for the 1st 5 years.[/FONT]

getmore4less

lou1182 wrote: »

Hi

Sorry I'm not very familiar with the financial vocabulary but I'll try to provide as much information as I can.

The ERC on the first property will finish in 9 years. That's why my partner is saying that the 'exit' fees are quite high, hence the 'mortgage porting' is a better option.

...........

<<by bringing the ERC money he will effectively be gifting you 1/2 that for the rest being on a higher rate.>> --> Could you please expand a little more?

Thank you and appreciate your help.
Linda

need that ERC number,
9 years seems a long time unless he just got a 10y fix, if that's the case why are they letting him port and reduce the erc time to 5years?


I may have that idea the ERC kind of gets split wrong, he just ends up with less cash if he pays it and you still borrow the same amount.

lou1182

<<9 years seems a long time unless he just got a 10y fix, if that's the case why are they letting him port and reduce the erc time to 5years?>>

-> You're right.. I just checked the mortgage offer again and it states that the 'ported' portion of the mortgage is to be paid at a fixed rate of 3.34% for 98 MONTHS (that's just over 8 years).
And yes, my partner just signed a 10y fix deal a couple of years ago.

lou1182

<< Sounds like your partner should pay the extra 1.35% on £107,196 for the 1st 5 years.>>

-> Is there an online simulator that could help us run this calculation?

getmore4less

How much is the ERC.

If he does not port you can look at other lenders.

wantonnoodle

If you were still in the process of sourcing the additional mortgage on top of the ported element, I would have strongly recommended you find a broker who would be able to help you complete this calculation, however it seems you are much further down the line than that.

It may be possible to find some sort of independent financial adviser or accountant who would be able to advise on the arrangements however I'm not sure what this would cost, as I would expect it to be quite complex.

I would be minded to agree though, that your partner should be covering the additional interest on the ported value as this was a rate that you have not had any say in.

Tom99

lou1182 wrote: »

<< Sounds like your partner should pay the extra 1.35% on £107,196 for the 1st 5 years.>>

-> Is there an online simulator that could help us run this calculation?

[FONT=Verdana, sans-serif]If the facts are as straight forward as you have suggested ie you are paying an extra 1.35% on £107,196, then you are paying an extra £1,447 pa or £120 per month.

[/FONT] [FONT=Verdana, sans-serif]If your new mortgage is a repayment one then that figure will reduce a little each month as capital repayments are made.

[/FONT] [FONT=Verdana, sans-serif]You also need to work out the total of the extra interest you will pay v the early repayment figure to make sure it is worthwhile porting the existing mortgage.[/FONT]

getmore4less

It is not as simple as the payments because the capital parts are on different schedules.

I will do the numbers later with an explanation.