Mortgage Porting Etc

jellybean92

Hi all,
We are about to list our main residence for sale. We have approximately 50% equity and 50% mortgage at present. We would like to purchase a lower priced property, probably about 1/2 to 2/3 of the current property value. 
However, we are still within our original mortgage agreement and are therefore liable to pay an early repayment fee. 
To avoid the repayment fee, I wondered whether it would be worth trying to port the mortgage into the cheaper property, or should we just take the hit as the rates would be very uncompetitive? I suppose in the long term the early repayment fee would be recouped by poorer interest rates anyway.
Would you suggest we get in touch with a mortgage broker and if so, any advice on finding a "good" one?
Any advice much appreciated.

Thrugelmir

Whether it's redeeming the existing mortgage depends on the amount owed, the ERC and the interest rate. 

jellybean92

Understood, thanks, presumably a mortgage adviser could talk us through this with the figures. Would it be advisable to take advice before selling to work out the best position to approach the bank?
As we are self employed in the hospitality industry (we own two holiday cottages), our income (during Covid-19) has also significantly fallen since taking out the original mortgage. Are we able to apply using the covid-19 grant "income" as a replacement fund source in the period of months while rental is rendered impossible? 
Thank you

Thrugelmir

The nature of your trade and the lack of income is going to impact your mortgage application at the current time. Lenders work on facts not supposition. Hopefully there'll be further relaxation of the lockdown shortly. 

jellybean92

Thanks, I presumed as much. How many months of income would we need after lockdown is eased would you assume? We do have a large amount of capital in property and savings also which presumably we could borrow against? Many thanks.

[Deleted User]

I cant get an application placed anywhere for a self employed hairdresser with years and years of good accounts and in an industry that is likely to bounce back quite quickly.   Similar to hospitality in a way.   I would guess you have an almost zero chance of getting a new mortgage until you can show business statements confirming income coming in to the account at previous levels, and even then they would be worried about your loss of a few months of the year and what thats going to do to your 2020/2021 figures. 

Some lenders are flat out refusing applications if you have taken any income grants from government as it is an admission that your finances are hit and you are unable to keep going without help.  

I would be talking to a broker once you are trading and seeing how long you will need to wait. I would expect 3 months of trading statements will be requested

jellybean92

Thanks, that sounds pretty terrible and I see your point regarding hairdressing. Hopefully we can find some leeway! We have enough in savings to buy outright without a mortgage so we may have to fall back on that I suppose. We also have a constant income from investments so presumably a specialist lender might consider this?
It's not an ideal situation but on the plus side for us the market for selling seems to be very strong and we've had loads of interest.