Moving house and equity

Joeisaware539

If my lender says I can port, I can move mortgage on with current borrowing then make up new house with rest of my cash?

CSL0183

Joeisaware539 said:

If my lender says I can port, I can move mortgage on with current borrowing then make up new house with rest of my cash?

What is the desperation of porting the mortgage for? 

Seems like an unusual strategy? Surely you would be best selling the house and paying off the mortgage and then applying for a new product with the best LTV rate on the market as your deposit will clearly be substantial. 

What’s the fascination with the porting?

Joeisaware539

CSL0183 said:

Joeisaware539 said:

If my lender says I can port, I can move mortgage on with current borrowing then make up new house with rest of my cash?

What is the desperation of porting the mortgage for? 

Seems like an unusual strategy? Surely you would be best selling the house and paying off the mortgage and then applying for a new product with the best LTV rate on the market as your deposit will clearly be substantial. 

What’s the fascination with the porting?

Fixed for more years yet. Porting means I can move my mortgage and then buy the bigger house with all the cash we have for the nee house so, (sell our current house) equity -> nee house -> equity + our cash. 

MWT

Porting to avoid an ERC is not unusual.

Sounds like a solid plan as long as your lender agrees and you can pass the AML checks for the source of your cash then you should be fine.

Joeisaware539

MWT said:

Porting to avoid an ERC is not unusual.

Sounds like a solid plan as long as your lender agrees and you can pass the AML checks for the source of your cash then you should be fine.

Yes, lender has agreed. We will use £450,000 to £600,000  approx of our own cash depending on house to choose from, allot of people have said checks for this sum? 

We are moving to a gated development with 5 executive houses within the plot. Developer has said if we reserve early we can spec hence urgency.

After our intention is to pay the mortgage off in full within a few years once ERC passed and on SVR. 

Joeisaware539

I forgot to add, it’s our second house. Our current house is a 3 bedroom semi detached. I should of included above but can’t edit so included in new post. 

It was funny, we showed our neighbours the new property we connected to, we are moving and they so off with us now. It’s slightly bizarre... However they was fine with us before. We use to consider these neighbour our friends (to some extent) however they always own very nice cars and her partner always says “when I’m upgrading” I say I’m happy and it keeps me going from A to B. 

It’s as if they jealous - we are moving house? But they could surely move up if they don’t buy expensive cars etc.. 

Surely everyone moves house in time? It just left me and my wife feeling a little strange about how they reacted...

I think they see us below them because we don’t own large expensive cars.. We own a A3 & a polo (actually own it) 

CSL0183

Your outstanding mortgage is only £125k though. You are portraying yourself as a young couple that are cash rich and now  your neighbours are jealous of you? 

How does one suddenly afford to move from a £200k house to a £900k one? Of course, that’s none of my business, I suspect an Inheritance or a lottery win of some sorts but given that you have created an image of yourself as cash rich then I’m not sure I understand the real need to fart about with a £2k or so ERC penalty? Especially given the fact that if you are so cash rich then you will get the very best LTV and rate on the market. If you offset the cost of that saving against the ERC of a small £125k mortgage then it would likely cost you just peanuts. 

If I had £700k cash sat in my bank account like you say you do, last thing I would be doing would be farting about with an ERC on a £125k mortgage. 

Can the £700k you suddenly have in cash in your bank account be fully certified? Every penny needs to be tracked back with scrutiny. If so, then good luck and remember and set aside some hefty stamp duty fees for your new purchase. 

Unusual thread. 

Redwino222

This is a truly unusual thread.  

You have clearly come into a lot of money very quickly, but aren’t particularly financially savvy.
i would recommend seeing a Financial advisor.

CSL0183

The maths don’t really stack up either,

You purchased for £178,000 with a £30,000 deposit which left a mortgage balance of £148,000. Today, that house is worth £234,000 and you have a £125,000 mortgage remaining. So in summary you have paid off £23,000 capital and the house value has increased by £56,000. Added to the deposit, you have equity of around £109,000. If you are cash rich, why have you only paid off £23k?

Suppose that doesn’t really matter but then you go onto say that this will be a 2nd house in a post above? That would have huge ramifications for tax issues, 3% additional tax + stamp duty if in England but a lot more if in Scotland or Wales. 

You then go onto say you will use £450-£600k of your own money to buy the £525k-£890k house? Those are very specific numbers? 

Regardless, surely if you sold your existing property for its £234k and ported over the £125k mortgage, you would be short of money to purchase the £890k house, even with the £600k cash injection. (Never mind the legal fees you would need for a house in this price range) 

Sorry, figures seem to be all over the place as does the “reason” for trying to save peanuts on an ERC for a small mortgage (in relation to the purchase price of a £900k house). 

I hope it all works out for you and your new neighbours aren’t as jealous as your old ones. 

enthusiasticsaver

Joeisaware539 said:

Hi all, me and my partner both bought our first house 4 years ago at 27. A nice 3 bedroom semi detached. 

I would like to ask some questions: I am new to this website.

I would like some advice, our house is valued at £234,000 - our remaining mortgage is £125,000. 

We are looking to move to a new house in the region of £525,000 to £890,000 price region. 

We are using cash fo fulfil the new purchase, leaving our remaining mortgage active. 

How does it work moving “equity” from your house work? 

You repay your existing mortgage and complete on the new mortgage.  If you are on a fixed rate deal you may be able to port it over if you are staying with your current lender.  If not there may be an ERC.  So if you sell for £234000 and your mortgage is £125000 then your equity is £109000 less costs.  The new property will cost say £550000 and if you are leaving your mortgage at £125000 then you need to make up the difference in cash.  So the equity or deposit on new property is £109000 plus the cash you are adding to it (£316000) and the mortgage of £125000. Costs are on top. 

You cannot keep the remaining mortgage active as it is secured on the house you are selling. You can keep the same amount though and port it over if they allow.