Moving house with outstanding mortgage

Tight_Fist

Hi, I'm not sure if this is the correct forum for this question so apologies if not.
I'm looking to move house (first move) and I have an outstanding mortgage. I'll just round figures off for ease of explanation but basically I have a £300k home with a £50k mortgage still outstanding and my mortgage is portable.
My question is, when I'm looking at properties can I take it that a £350k house is in essence like-for-like in the sense that I would sell the house at £300k and port my mortgage so that I still owe the other £50k? or is it the case that I never actually (officially) own the last £50k when I sell the house so I'd get £250k and port over the outstanding £50k so like-for-like would be £300k?
For arguments sake let's just ignore any fee's or charges associated with moving house i.e. estate agent fees, removal costs etc.
I hope this makes sense

Justonemorecupoftea

I'm not quite sure about the question, but I'll explain what's happening with my sale/purchase at the mo (numbers simplified):

We have £150k left to pay on our balance and £100k in equity (based on the agreed sale price)

The house we are buying is £350k.

We are using the £100k equity for our onward purchase, leaving £250k to pay.

We are porting the £150k mortgage and taking out a second mortgage with the same provider for the difference (£100k).

This way worked out cheaper than the early repayment charge (our mortgage broker did the maths!)

user1977

You sell your £300k house, you use £50k of that to repay your existing mortgage, you're left with £250k cash. That (and anything else you want to add from elsewhere) is your equity, and you can add onto that whatever your mortgage lender is prepared to lend to you. "Porting" tends to confuse people, it just means the terms of the mortgage product can be carried over (so you can use the remainder of the 3 year fixed rate or whatever), in reality you're still paying off the old mortgage and starting a new account.

Tight_Fist

Justonemorecupoftea said:

I'm not quite sure about the question, but I'll explain what's happening with my sale/purchase at the mo (numbers simplified):

We have £150k left to pay on our balance and £100k in equity (based on the agreed sale price)

The house we are buying is £350k.

We are using the £100k equity for our onward purchase, leaving £250k to pay.

We are porting the £150k mortgage and taking out a second mortgage with the same provider for the difference (£100k).

This way worked out cheaper than the early repayment charge (our mortgage broker did the maths!)

Hi, Thanks for your quick response. I think it is a similar situation to mine and based on this I think I'll need a second mortgage for the last £50k.
Assuming my house sells for £300k I'll have £250k equity with a balance on the existing mortgage of £50k. So If I'm looking at a £350k property I will need another (second) mortgage to cover this.
Thanks

Tight_Fist

user1977 said:

You sell your £300k house, you use £50k of that to repay your existing mortgage, you're left with £250k cash. That (and anything else you want to add from elsewhere) is your equity, and you can add onto that whatever your mortgage lender is prepared to lend to you. "Porting" tends to confuse people, it just means the terms of the mortgage product can be carried over (so you can use the remainder of the 3 year fixed rate or whatever), in reality you're still paying off the old mortgage and starting a new account.

Hi, I was thinking that I could sell the house for £300k, not pay the bank back the £50k I owe but instead I'd secure that outstanding mortgage by porting it on a more expensive house (£350k). 

TadleyBaggie

Tight_Fist said:

Hi, I was thinking that I could sell the house for £300k, not pay the bank back the £50k I owe but instead I'd secure that outstanding mortgage by porting it on a more expensive house (£350k). 

That's not how it (usually) works. The mortgage company will have a first charge registered against the property, which means when it is sold the mortgage company will only relinquish the charge once the outstanding mortgage is paid off. Without the mortgage company relinquishing the charge, the property cannot be sold. 

AdrianC

Tight_Fist said:

I'm looking to move house (first move) and I have an outstanding mortgage. I'll just round figures off for ease of explanation but basically I have a £300k home with a £50k mortgage still outstanding and my mortgage is portable.
My question is, when I'm looking at properties can I take it that a £350k house is in essence like-for-like in the sense that I would sell the house at £300k and port my mortgage so that I still owe the other £50k?

You sell your house for £300k, your solicitor repays the £50k mortgage. You have £250k equity.
You buy a house for £350k, your £250k equity is paid over, and you draw down a £100k mortgage...

Irishpearce26

Tight_Fist said:

user1977 said:

You sell your £300k house, you use £50k of that to repay your existing mortgage, you're left with £250k cash. That (and anything else you want to add from elsewhere) is your equity, and you can add onto that whatever your mortgage lender is prepared to lend to you. "Porting" tends to confuse people, it just means the terms of the mortgage product can be carried over (so you can use the remainder of the 3 year fixed rate or whatever), in reality you're still paying off the old mortgage and starting a new account.

Hi, I was thinking that I could sell the house for £300k, not pay the bank back the £50k I owe but instead I'd secure that outstanding mortgage by porting it on a more expensive house (£350k). 

Essentially yes you can, that is what is call porting your existing mortgage. As long as it all fits the criteria and affordability which im sure you will be fine with. You can also apply to borrow more at this stage as well. However you may be best selling, paying off the mortgage and taking out a better product with a lower rate than porting.

phillw

Porting and having a second mortgage for the additional borrowing is a nightmare, because the lenders have to agree to each other and there are less providers who offer second mortgages. So you might end up being forced into using your existing lender for the extra borrowing at a higher rate than elsewhere or then they might not even agree to it.
https://www.moneysavingexpert.com/mortgages/porting-your-mortgage/

You should compare what the cost of interest at the two rates is compared to the early repayment charge and what interest you'll pay for a single mortgage over it's tie in period.

Even if it is cheaper to port, you may end up with two mortgages with different early repayment charge dates and you could end up having issues switching to a new mortgage deal in the future when the first deal expires & so you could end up paying less now and more later.

yllop1101

I ported 2 mortgages and added to it with a 3rd, all with the same lender. We (my broker and I) chose to do this because my original mortgage had the lowest interest rate, which mitigated against the slightly higher rates of the other 2 mortgages. We brought all products up to alignment on dates though, E G. Extending the terms so that they were the same.
It was easy enough to do, and now I just have 3 payments come out on the same day for my mortgage. They're all variable rates with no exit fees so I can move onto a single product as and when I want to. 

Irishpearce26

phillw said:

Porting and having a second mortgage for the additional borrowing is a nightmare, because the lenders have to agree to each other and there are less providers who offer second mortgages. So you might end up being forced into using your existing lender for the extra borrowing at a higher rate than elsewhere or then they might not even agree to it.
https://www.moneysavingexpert.com/mortgages/porting-your-mortgage/

You should compare what the cost of interest at the two rates is compared to the early repayment charge and what interest you'll pay for a single mortgage over it's tie in period.

Even if it is cheaper to port, you may end up with two mortgages with different early repayment charge dates and you could end up having issues switching to a new mortgage deal in the future when the first deal expires & so you could end up paying less now and more later.

No its not. They can borrow from the same lender like i did. Even if they ported and borrowed from another lender they could still get a better product than their existing product. Once the term comes to an end remortgage both amounts into one product. its not difficult.

If they borrow with the same lender as their ported mortgage it will be one payment and the lender will look to remortgage both at the same time.