porting mortgage

Helsbels1987

I currently own a flat, i bought this for £105000, I got a mortgage for £63000 and have payed off almost £25000 of this so have around £38000 left to pay. If I was to move and buy a house which is for sale at £160000 I understand that I can port this mortgage but I have some questions if anyone can help. Would I be able to use the £25000 I have payed which I understand is called equity to use as a deposit on the new house? Also am I correct in thinking that in porting the mortgage of £38000 left to pay will be added to a new mortgage e.g. £160000 for the new house, minus £25000 already payed in equity = £135000 - 38000 already in mortgage so I would have £97000 added to my current mortgage? Is this correct and I hope this makes sense! Thanks for any help. 

eddddy

Presumably you're selling your flat when you move - but you haven't mentioned how much you expect to sell your flat for.

Your equity in your current flat would be:
'The Selling price of your flat' minus '£38,000 outstanding mortgage' 

Your deposit for the new house would be
'Your equity (as above)' plus 'Any savings that you have' minus 'moving expenses' minus 'Any savings you want to keep'



You'd port your £38,000 mortgage. You'd probably need to borrow more - it depends how much deposit you'll have.

TheJP

Essentially yes, what ever you sell your house for minus the £38k is your equity. When you port your mortgage whatever additional borrowing you take will likely be on a different rate. 

I ported in March, we ported our existing mortgage of £218K on 2.2% and borrowed £79k on 3.4%. Both fixed term products will end March 2023 which i will then look at a new product/lender. Doing this avoids ERC and often existing lenders will guarantee the additional borrowing due to the existing product/reliability.

saajan_12

Helsbels1987 said:

I currently own a flat, i bought this for £105000, I got a mortgage for £63000 and have payed off almost £25000 of this so have around £38000 left to pay. If I was to move and buy a house which is for sale at £160000 I understand that I can port this mortgage but I have some questions if anyone can help. Would I be able to use the £25000 I have payed which I understand is called equity to use as a deposit on the new house? Also am I correct in thinking that in porting the mortgage of £38000 left to pay will be added to a new mortgage e.g. £160000 for the new house, minus £25000 already payed in equity = £135000 - 38000 already in mortgage so I would have £97000 added to my current mortgage? Is this correct and I hope this makes sense! Thanks for any help. 

Are you selling the flat? 
There's no distinction between the 42k original deposit vs the 25k paid off the mortgage. What matters is the current value - outstanding mortgage (38k) -> this is your equity and will be your net proceeds from sale which can be used towards your house purchase (less costs).

Note 'deposit' has 2 meanings:
* It will be the 'deposit' as in non mortgage funds for the purchase
* It won't necessarily be the exchange deposit - that comes from whatever your buyer puts up as their 10% deposit plus if you have any cash to top up. Reason being, the rest of the equity isn't released until you actually complete on the sale, and the exchange deposit needs to be there at the point of exchange. 

Mortgage wise, you can port and upsize / add to the current 38k mortgage, or you can redeem this one upon completion and apply for a new one. Just look for the best deal which may or may not be with your current lender. If you're within the fixed term, then there may be early repayment charges to consider for the latter.