Porting mortgage - how it works

hart89

I am 2 years in to a 5 year fixed rate with Yorkshire Building Society. Rate is 2.49%. I am looking to sell my apartment and buy a house nearer to my home town. I am able to port the mortgage, but am a bit unsure of how it works

Currently owe £155k to YBS
Hoping to sell flat for £195k

I have seen some houses that I like around £190k. Also seen a house for £130k that required a bit of work (new kirchen/bathroom/knock walls through)

I know when porting you just port the interest rate, so say if I were to buy the £130k house would I have £40k in equity from selling my flat and then have to put down 10% deposit (13k) and have 3 years left of 5 year term or does it start on a new 5 year term? Also if you buy a house of lower value do you owe mortgage company any early repayment fee?

Just trying to work out how much money I'd have for renovation work if I were to go for the lower value house, and how much monthly repayments would be. Confusing! 

K_S

@hart89 If you want to port to the cheaper 130k property, the final LTV cannot be any higher than that for your current product. So the lender may insist on repaying part of the mortgage to maintain the LTV and may charge you ERC on the amount that is not being ported. If you take that route, the end mortgage will have 3 years left of the 5 year term. I hope that makes sense.

hart89

Yeah I did read that somewhere. So say 117,000 mortgage on the £130k house (I started the current mortgage with 10% deposit so assume I will have to use 10% on next house) so difference between what is owed and new mortgage is £38,000, and early repayment fee is 3% so fee would be £1140. Is that right? 

CKhalvashi

Something close to this, very likely.

Your math is spot on with the numbers given, although a LTV element change may come into this somewhat, which may make the mortgage amount slightly less. 3% over 3 years is a saving on what you are paying now.

K_S

hart89 said:

Yeah I did read that somewhere. So say 117,000 mortgage on the £130k house (I started the current mortgage with 10% deposit so assume I will have to use 10% on next house) so difference between what is owed and new mortgage is £38,000, and early repayment fee is 3% so fee would be £1140. Is that right? 

@hart89 Generally speaking that's how it works. However, lenders sometimes have their own quirks in relation to porting so you need to check with YBS to be sure.

If YBS charges an ERC in this scenario, then yes that calculation looks about right.

dimbo61

You need to speak to YBS as they might not allow you to port the mortgage at 90%LTV.
You might be able to pay 10% off the mortgage without ERC !

Thrugelmir

hart89 said:

I am able to port the mortgage

A full mortgage application needs to be submitted and meet the lenders current criteria. Porting isn't an automatic right. Even if the current mortgage product is described as being portable. 

hart89

When you say about the LTV - I started with a 90% LTV, just logged on to Ybs and it is currently 81%. Does that mean I would have to put 19% deposit down so LTV is the same on new mortgage?

K_S

hart89 said:

When you say about the LTV - I started with a 90% LTV, just logged on to Ybs and it is currently 81%. Does that mean I would have to put 19% deposit down so LTV is the same on new mortgage?

@hart89 Generally speaking, it's the LTV for the product that you initially took out, so 90% LTV.

Thrugelmir

hart89 said:

When you say about the LTV - I started with a 90% LTV, just logged on to Ybs and it is currently 81%. Does that mean I would have to put 19% deposit down so LTV is the same on new mortgage?

You need to have a conversation with your lender and see what their current stance is. 

hart89

I have another question about porting my YBS mortgage, but to a higher value property. YBS don't have any telephone appointments until the 27th, and I am viewing a house this afternoon so was hoping someone may be able to help me before then.

Same as above , owe £154,000 on current YBS mortgage, 2 years in to a 5 year fixed 2.49% deal. 

The house I am viewing has an asking price of £210,000. I am trying to work out roughly what monthly repayments will be. I know that if you need to lend more than your current mortgage it will go on one of their current interest rates, mortgage adviser said its 2.79% for 15% deposit and 3.5% on 10% deposit on the 'top up' lending. 

If my original LTV was at 90% , am I able to port and put a 15% deposit or can I only port with a 10% deposit?

And will the new mortgage be £154,000 at 2.49% and then the difference at 2.79% or 3.5%? Its so confusing!