Second mortgage from a second lender, alongside ported mortgage?

shorty2240

Hi

I've got a 5 year fixed mortgage with Tesco, who you may have heard have stopped selling mortgages and might sell their portfolio to anyone.

If I want to move house, I do have the option to port that mortgage and I don't believe that will change. However, what if the property is more expensive? Tesco aren't doing any additional lending and won't give me a second mortgage now. Do I just get a second mortgage from a third party to cover the excess, is that ok?

All blurb about second mortgages doesn't really seem to cover the idea of using two lenders. Can two lenders give a mortgage on one property? Not that it's going to happen, but what would take place in the ol "if you do not keep up your payments your home may be repossessed by the bank" - if the bank doesn't wholly own the house?

davidmcn

shorty2240 wrote: »

what would take place in the ol "if you do not keep up your payments your home may be repossessed by the bank" - if the bank doesn't wholly own the house?

Just on this point - mortgage lenders don't "own" houses, the owners do. The lender just has a charge over the house. Anybody with a charge (whether first, second, third, etc) has the right to repossess it - but e.g. if a second mortgage lender repossesses, the first mortgage lender gets priority when the sale proceeds are dished out.

Most normal mortgage products expect to be the first mortgage, with second mortgages usually at a higher rate and for more limited amounts, so I'm not sure how feasible it would be to port Tesco and find a second mortgage to cover the balance. Depends on the figures you're talking about.

shorty2240

Thanks for clarifying, you may have guessed I'm not the most well versed on this mortgage malarky

After porting the mortgage, selling my current place, and chucking in some bonus savings for good measure, I'd be looking at borrowing an additional 50k from a new lender, on a house around 170-180k so 27% LTV ish.

I'll be calling Tesco later to chat about my options with them, but I'm willing to guess they'll be... limited.

Neutrinno

I don't believe you would be able to port your current mortgage and take out a second charge mortgage on the same property; having two charges placed simultaneously on the new purchase (Tesco would need to grant consent for the second charge). Second charge lenders would only lend on a property you already own.

If you need additional borrowing towards the purchase, and Tesco aren't offering further lending, you will need to look at an alternative lender and pay any early repayment charges in place on your current deal.

Mortgage_Adviser

Well the question is whether Tesco will sell their mortgage business to an active lender, so the lender with an active license to issue a new business.
If it is not the acrive lender you may not be able to port the existing mortgage and definitely will not be able to raise any extra money from them.
You may want to read a small print to check if you can leave early repayment charge-free if they can not honour their oblgation regarding the porting.