Mortgage broker - ask me anything

Moley42

We're hoping to move up the ladder soon so our new home will be worth more than our current one. How do the mortgage/s work? We currently have a mortgage at 1.5% until May 2024, will this existing mortgage port with us and then we get another to top up the difference? Meaning that if we do fixed rate on both (& I'm not entirely sure we will as I'm hoping rates will start decreasing soon) are we having to renegotiate 2 mortgages when the fixes expire? How do they calculate the LTV on the second one? really don't understand how it works! Help!

K_S

Moley42 said:

We're hoping to move up the ladder soon so our new home will be worth more than our current one. How do the mortgage/s work? We currently have a mortgage at 1.5% until May 2024, will this existing mortgage port with us and then we get another to top up the difference? Meaning that if we do fixed rate on both (& I'm not entirely sure we will as I'm hoping rates will start decreasing soon) are we having to renegotiate 2 mortgages when the fixes expire? How do they calculate the LTV on the second one? really don't understand how it works! Help!

@Moley42 You would do one of the following

- "port" your current mortgage and terms, and add a second mortgage part (additional borrowing from the same lender) to borrow the extra you need.
OR
- pay the ERC on the current mortgage and take out a new mortgage (different lender) for the new house.

If you go with the porting option, the additional borrowing LTV will be based on the total loan (original mortgage + additional borrowing) and value of the new property. So if your ported mortgage part is 200k, additional borrowing is 100k and new house purchase price is 500k, the LTV on the additional borrowing of 100k would be 60%.

Moley42

@Moley42 You would do one of the following

- "port" your current mortgage and terms, and add a second mortgage part (additional borrowing from the same lender) to borrow the extra you need.
OR
- pay the ERC on the current mortgage and take out a new mortgage (different lender) for the new house.

If you go with the porting option, the additional borrowing LTV will be based on the total loan (original mortgage + additional borrowing) and value of the new property. So if your ported mortgage part is 200k, additional borrowing is 100k and new house purchase price is 500k, the LTV on the additional borrowing of 100k would be 60%.

That is very helpful thanks. You also hit pretty much the exact figures we're looking at by chance which made it easier!
So, if we port and then get a second mortgage for the extra it has to be with the same provider? Or does that just make it easier? We're only 7 years in to a 25 year mortgage so I think the ERC would be too much to pay off now. 

K_S

Moley42 said:

@Moley42 You would do one of the following

- "port" your current mortgage and terms, and add a second mortgage part (additional borrowing from the same lender) to borrow the extra you need.
OR
- pay the ERC on the current mortgage and take out a new mortgage (different lender) for the new house.

If you go with the porting option, the additional borrowing LTV will be based on the total loan (original mortgage + additional borrowing) and value of the new property. So if your ported mortgage part is 200k, additional borrowing is 100k and new house purchase price is 500k, the LTV on the additional borrowing of 100k would be 60%.

That is very helpful thanks. You also hit pretty much the exact figures we're looking at by chance which made it easier!
So, if we port and then get a second mortgage for the extra it has to be with the same provider? Or does that just make it easier? We're only 7 years in to a 25 year mortgage so I think the ERC would be too much to pay off now. 

@moley42 Porting+additional lending can only be with the same lender.

To make sure you know your ERC terms correctly, dig out your mortgage offer letter from when you last re-mortgaged or switched products. Given that you mentioned "We currently have a mortgage at 1.5% until May 2024", the relevant period for ERC will be until the current fix ends, i.e. until May 2024. Whether the remaining mortgage term is 10 years or 20 years, that shouldn't make any difference to the ERC.

Moley42

K_S said:

@moley42 Porting+additional lending can only be with the same lender.

To make sure you know your ERC terms correctly, dig out your mortgage offer letter from when you last re-mortgaged or switched products. Given that you mentioned "We currently have a mortgage at 1.5% until May 2024", the relevant period for ERC will be until the current fix ends, i.e. until May 2024. Whether the remaining mortgage term is 10 years or 20 years, that shouldn't make any difference to the ERC.

Ahh, OK thanks, we got a statement in Jan that had the current ERC on it so I'll check that.
If we don't port is the new mortgage used to pay off the ERC and balance on the old one?
Apologies for all the follow up questions (Of which I have oh so many more) this is complicated and I would like to avoid making it more so. I am going to be seeing a mortage advisor in person before we take any concrete action for sure 'cause this makes my head hurt! 

K_S

Bradden said:

I've been asked by the court to provide evidence of my mortgage capacity.

I've struggled to find anyone who can do this apart from some online companies who charge ££££

Can someone direct me to a company who could help?

@bradden I doubt you'd get anyone to do this for less than a few hundred quid as it involves a regulated individual giving their professional opinion to a court. I vaguely recall pointing a client to an online service which cost him £300-400 or so.

I hope you get what you need at a cost that you're happy with, good luck!

atlasmm

Hi,

The below quote is taken from onlinemortgageadvisor.co.uk -

“Kensington and Principality Building Society, for example, only use soft searches when performing a credit check.”

Is this correct? A full mortgage application can be completed with this lender without a hard search being left on the credit file and the worst that can happen is the lender rejects the application, leaving no trace on the credit file?

Thanks

atlasmm

Hi, my question is how much a hard search actually impacts a mortgage approval chances. 

If we apply for a mortgage and are rejected, is this going to impact our chances if we were to apply again in 3 months? Or is it only going to impact us if we applied again in the same month. 

Thanks for all the help so far!

Croesus_IfOnly

K_S said:

Croesus_IfOnly said:

Hello,

I’m a longtime reader of the MSE Forum, but first time poster.

Apologies if this is in the wrong space but I had a query about a home where there are two mortgage products from the one provider; we ported our old product from our old house to our new one plus addn borrowing with same lender. 

My partner and I will have approx £250K owing on the mortgage when the terms finish:
1) £100K @ 2.5%

2) £150K @ 2.1% which ends 6 months after the first product 

Both have Early Repayment Fees of ~10% 

What are my options when the first product term ends? Are the following exhaustive:

(A) Product transfer each separately on term expiry - leaves us locked into lender as we’ll always have two products

(B) Let first product lapse onto SVR until we can look at product transfer or remortgage for the lot - would this be 6 to 4 months out from product end date of the second mortgage? 

We’re reluctant to pay an early repayment penalty, but equally want to maximise our options as our current lender isn’t always the most competitive on the market. 

Thanks in advance :-) 

@croesus_IfOnly ERC of 10% or 1%?

If your current lender offers any no/low ERC no/low fee tracker/discount products, then you may have a few more permutations and combinations to try.

Also, for PTs, some lenders will waive the ERC within x months of fix-end so you may be able to get away with a 3 month period on SVR. And a very small number of lenders will have pro-rated ERCs in the last year so check that as well.

@K_S Thanks for the response. I actually got the ERC wholly confused with O/P allowance, ERC is 5% to end of product. 

Thanks for adding in potential of low/no fee tracker/discount products which could bridge that 6 months between the two products. A lot will depend on how competitive current lender is compared with market rates I suppose. 

Lots of food for thought - thank you! 

Jase_UK

Hello all

Myself and my partner have an agreement in principle for a shared-ownership mortgage, agreed in Jan 2023. This is for ~£120,000, with a 6.24% fixed rate for 3 years. 

The house is due for completion "March/April", but has been delayed due to site handover delays. My question is, do you think it's worth me going back to the broker to see if the recent lowered interest rates might have a positive impact i.e. finding a new mortgage deal?

Many thanks