Second mortgage?

happy_2008

Hi all
I have just remortgaged last month on a new 2 year fixed term but am considering upsizing early next year and wondered what options I have? Last time I spoke to my advisor he mentioned that porting my mortgage was not available so if I wanted to upsize I would have to apply for a second mortgage? I currently own around £100k on my currently mortgage and would probably need to borrow an additional £120k to upsize but wondered what options I have?

kingstreet

Assuming you are selling and buying, your current mortgage will be repaid from the sale proceeds and you will take a new mortgage for the new purchase.

When you port, you port the rate from the old mortgage to a new one and take any increased borrowing on one of the lender's new/current products. This remains one first charge mortgage made up of several sub-accounts to reflect different tranches of borrowing at different times and at different rates.

haras_nosirrah

Why did your advisor say you couldn't port it? Is is a non portable rate or do your circumstances mean that only a rate switch was possible and that you wouldn't fit criteria if you needed to take out a new mortgage?

happy_2008

My advisor said I would be able to port it on my current product. So if I sold my property I would be liable to the early repayment charge?

[Deleted User]

Sounds like crossed wires.

You port the mortgage product when you move properties. Check your original offer documents to check its a portable product. Most are

kingstreet

Example.

You currently owe £100,000.

Your current rate is 2%.

You sell your property for £150,000.

Your solicitor repays the mortgage leaving him £50,000 residual equity for the onward purchase.

You are buying for £250,000. Your £50,000 becomes your "deposit" and you need a mortgage for £200,000.

You go bank to your existing lender and apply for a £200,000 mortgage and as you are porting, the first £100,000 goes on your current rate and the increased borrowing on a new rate in the lender's current range. Let's say that's 1.75%.

You complete and going forwards you have one first charge mortgage with sub-account one at 2% on £100,000 and sub-account two at 1.75% on £100,000.

happy_2008

Well explained King
However, this part


"You sell your property for £150,000.

Your solicitor repays the mortgage leaving him £50,000 residual equity for the onward purchase."


Is this part subject to early repayment charge usually?

kingstreet

happy_2008 wrote: »

Well explained King
However, this part


"You sell your property for £150,000.

Your solicitor repays the mortgage leaving him £50,000 residual equity for the onward purchase."


Is this part subject to early repayment charge usually?

Yes. If you do not port the rate to the new mortgage. The above happens on the same day. You sell, the mortgage is repaid, the new mortgage money is added to the residual equity and your solicitor passes on the funds for the new purchase to the vendor's solicitor.