Paying mortgage ERC charges or porting mortgage?

aeg85

Hello,

I'm looking for some advice please.

Basically, we're not overly happy with area of the new build house we bought 2 years ago and are thinking of selling our house to buy my husband's Uncle's house. The problem is we're currently 2 years in to our 5 year fixed rate mortgage which has early repayment charges of around £5-6K. If we went ahead and bought this new house we would also be looking at increasing our mortgage by no more than £20,000. We're currently with Accord Mortgages and we originally borrowed approx. £146,000. Our current mortgage rate is 2.49%.

In our mortgage offer it does say the mortgage is portable but I'm not entirely surely what it means when you need to increase the amount borrowed, would we be better paying the ERC? We haven't had our property valued yet, we're hoping to by the end of this week. I just wanted some advice first. Has anyone been in this situation?

Thanks

dimbo61

It is up to the lender if they are happy with the new property you want to buy and the Loan to Value.
If your 5 year fix was 85%LTV and this would increase to 90 % with the new property with the extra £20.000 they may well say NO !
If you then wanted to buy your uncle,s house you would have to bite the bullet and pay the ERC,s IF you can find another lender to give you a mortgage
We have No idea of your income, deposit paid on current home or current value or credit score, situation !
Your uncle might sell to you cheaper or your home might be worth £20,000 more than when you bought it ( only you will find that out )
Get your home valued first

aeg85

We have a joint income of just under £60K and our deposit was £50K both of our credit scores are excellent, we have no debt except my student loan. We bought our house for £196K and his Uncle's house is £215K.

LRmortgage

If you for affordability, criteria etc now, you should be able to port over your current outstanding amount and rate to the new property and then take another chunk of money to make up the difference on one of their current rates.

Speak to your broker or the lender.

AnotherJoe

I would say speak to a broker and your lender.
It may be you can get an lower rate than your current 2.49 which will help compensate for the ERC.

amnblog

Porting means the Lender gives you the facility to take the current product to a new mortgage on a new home. This means you do not incur a redemption penalty (unless the new lending total is lower).

This is subject to the Lender agreeing to lend against the new property which doesn’t sound like a problem here.

Go back to your original broker for advice.