buying new build and mortgage posting query

poggs

Hello,

Weird question popped up today in a discussion :-)

Homeowner has a 10 year fixed mortgage that allows porting.

Homeowner has purchased a new build 3 years into the term and has sold the existing home. Bank has happily agreed to port the mortgage over. No additional borrowing is necessary.

moving on, the house sale has completed on time and the funds have been received but then the new build is delayed by a month (or even 3).

So there is now an outstanding fully up to date mortgage thats still being paid every month on time but no home to secure it on?

What will the bank do in this circumstance?

Thrugelmir

Existing mortgage will be discharged. No new funds will be released until the new build is ready to complete.

davidmcn

poggs wrote: »

So there is now an outstanding fully up to date mortgage thats still being paid every month on time but no home to secure it on?

No, there's no mortgage during the gap. It was repaid when the first house was sold.

poggs

Ok, so would the ERC be payable when the mortgage is being ported over in a month?

kingstreet

Some lenders don't accept a port where the sale and purchase are non-simultaneous.

Others will charge the ERC on the sale and refund it on the purchase completion, provided the period between the two is eg three months or less.

It varies from lender to lender. Ask yours.

davidmcn

poggs wrote: »

Ok, so would the ERC be payable when the mortgage is being ported over in a month?

It would be payable on redemption (as the lender has no idea if or when the purchase will happen) and credited whenever it does complete. If, as stated above, they allow it at all.