Porting a mortgage

Tumtitums

Hello  Can i check this plan to buy a £300000 house to make sure i'm not missing anything.

I  have a house in which i have a £100000 mortgage. If i sell the house for £200000 and port the £100000 mortgage does this mean that i am now able to add these two together to buy a house worth £300000. Is there anything else i should consider for this strategy

Thanks

SDLT_Geek

Tumtitums said:

Hello  Can i check this plan to buy a £300000 house to make sure i'm not missing anything.

I  have a house in which i have a £100000 mortgage. If i sell the house for £200000 and port the £100000 mortgage does this mean that i am now able to add these two together to buy a house worth £300000. Is there anything else i should consider for this strategy

Thanks

Clearly you would need to raise another £100,000 together with costs of sale and purchase.

Think of it this way.  On the sale you get £200,000.  £100,000 of it is borrowed money which the lender might allow you to continue to borrow (by "porting" the loan).  It is only the other £100,000 left which is your money to put in towards the £300,000 purchase.

SpiderLegs

Tumtitums said:

Hello  Can i check this plan to buy a £300000 house to make sure i'm not missing anything.

I  have a house in which i have a £100000 mortgage. If i sell the house for £200000 and port the £100000 mortgage does this mean that i am now able to add these two together to buy a house worth £300000. Is there anything else i should consider for this strategy

Thanks

You can’t just magic money out of thin air.

if you sell for 200k you will be left with 100k. If you then want a 300k house you will need a new 200k mortgage.

Tumtitums

im confused if i am not paying back any of the £100000 with the proceeds of the sale then why would i need to raise another £100000 as i would have £200000 from the sale and the £100000 i am already borrowing therefore i would only still be paying back the £100000

AdrianC

Tumtitums said:

Can i check this plan to buy a £300000 house to make sure i'm not missing anything.

I  have a house in which i have a £100000 mortgage. If i sell the house for £200000 and port the £100000 mortgage does this mean that i am now able to add these two together to buy a house worth £300000.

You own a £200k house. You owe £100k to the mortgage lender. So you have £100k of equity in it.

To buy a £300k house, you use that £100k equity, port the £100k current mortgage, and borrow an additional £100k.

Gavin83

So you sell your house for £200k and you port over the £100k mortgage. You would only have the £200k from the house sale to spend. They’ve already given you that £100k, they won’t give it to you again.

Regardless of how you do it you’ll have £200k to spend on a house, unless you’re putting your own money in on top.

SpiderLegs

Tumtitums said:

im confused if i am not paying back any of the £100000 with the proceeds of the sale then why would i need to raise another £100000 as i would have £200000 from the sale and the £100000 i am already borrowing therefore i would only still be paying back the £100000

Under your logic you can then sell that 300k house, receive 300k in cash, port your 100k mortgage and then buy a 400k house.

then you can sell the 400k house, receive 400k in cash, port the 100k mortgage and then buy a 500k house.

then you can sell the 500k house, receive 500k in cash, port the 100k mortgage and then buy a 600k house.

then you can sell the 600k house, receive 600k in cash, port the 100k mortgage and then buy a 700k house.

then you can sell the 700k house, receive 700k in cash, port the 100k mortgage and then buy a 800k house.

then you can sell the 800k house, receive 800k in cash, port the 100k mortgage and then buy a 900k house.

then you can sell the 900k house, receive 900k in cash, port the 100k mortgage and then buy a 1m house.

then you can sell the 1m house, receive 1m in cash, port the 100k mortgage to buy a 100k house.

congratulations. You are now a millionaire.

george4064

Affordability = Equity in your existing house + existing mortgage (to be ported) + any other savings you can add + any additional mortgage borrowing you can take out

So, you currently have £100k in equity and a £100k mortgage, how much more affordability can you add via savings and/or bigger mortgage?

Tumtitums

well it seems that you are suggesting that its compulsory to pay back the £100000 after the sale is completed . This isnt what i thought porting was. I thought it was just taking the £100000 to a new property  under the same conditions

user1977

Tumtitums said:

well it seems that you are suggesting that its compulsory to pay back the £100000 after the sale is completed . This isnt what i thought porting was. I thought it was just taking the £100000 to a new property  under the same conditions

No, when you sell any property you repay the mortgage. Porting just means that your new mortgage will (at least in part) use the same product, and you won't need to pay the early redemption penalty. 

julicorn

Tumtitums said:

well it seems that you are suggesting that its compulsory to pay back the £100000 after the sale is completed . This isnt what i thought porting was. I thought it was just taking the £100000 to a new property  under the same conditions

Did you think they'll just gift you £100k for the pleasure of continuously doing business with you?

At the moment, you own a £200k house (so that's your asset), but owe £100k to your lender (that's your liability), so effectively you have £100k (200k house minus 100k mortgage). You can get the lender to lend you that £100k on a new house, but that still only gives you the £100k that's currently yours, plus the £100k that the lender lends you, i.e. £200k. There isn't an additional magical £100k, unless you are able to borrow more money.