Porting without selling existing home

romantix

Hi! Hoping you brilliant people can help. I'll try and keep it simple.

I'm looking to remortgage now to get a 10y or 5y fixed @1.93% mortgage with Lloyds. I don't want 2y fixed due to the current uncertainty on bank of England base rate.

I expect to buy a more expensive house after 3 years with my partner, but not sell my current property. 

I'd be looking to port as repayment fee on 10y fixed would be £11k and £6k on 5y after three years. 

Can anyone tell me how it would work in that I won't be selling my current home, rather buying a second one. For purposes of illustration, my current home will have £150k loan remaining, and new property that I would buy will likely by £400k (split between me and my partner).

Affordability I will not be able to get £350k (my ported mortgage and half of new mortgage), so will need a buy to let my current home (have to port as mortgage lender will not allow me to change mortgage from residential to buy to let) and so only need affordability for £200k (half of new home with partner).

So far is this all correct? I'm aware that I'll need two parts to the second home mortgage at different rates that will finish at different times - but is there anything I'm missing or is there likely to be an issue in that I'll need a buy to let before porting to prove affordability? 

Ultimately - I'm trying to decide to go fixed 5y or 10y. I'm thinking if I am missing anything getting a 5y fixed now will be less complicated, but if I'm not missing anything and the scenario above is possible I would like to hold onto this rate for 10y as believe rates will go up significantly.

Any help or clarity much appreciated!

GentleGiant01

Are you planning to rent out your first property? If you aren’t, and are just using this as a way around the affordability checks I advise against doing this, for a start it’s mortgage fraud, and there are more checks as the bank needs to satisfy itself you aren’t doing it just for a second home. 

As for what you need, I’m unsure - sorry. Plenty of good brokers on here can probably help though! 

I’m currently in the process of transferring my current home to a Let to buy and moving - I’ve been asked for a LOT of information! 

dimbo61

If you want to " Port " your 10year fixed rate mortgage deal to a new property you could well get caught out by the Lender and end up paying the ERC.
LTV is very important when porting and with the old property now on a BTL mortgage the computer may well say NO

You need the help of a broker who deals in BTL mortgages.

kingstreet

Many lenders won't port from a remortgage, only from a sale. You'll need to ask Lloyds as it's a direct only lender. 

romantix

Thanks @kingstreet I'll do that tomorrow and come back to you - this may answer why I can find anything on the internet on it!!

@GentleGiant_2 yes all above board, I just don't want to sell my first property and will NEED to rent out to cover cost of having two mortgages of course!

@dimbo61 how do you mean about being 'caught out'? But that is good hear re LTV because it would go from 70% currently to 90%  

romantix

To update, Lloyds do allow you to port from a remortgage and not just selling the house. However they wouldn't offer the BTL product to get a BTL mortgage on my first property, and so would have to apply for this via another lender at the same time as porting with lloyds.

Does anyone know lenders that do allow remortgaging from residential to BTL?

kingstreet

Most lenders will accommodate a consumer buy to let, which is the regulatory name for a remortgage to BTL where you own and occupy the property you intend to let.

romantix

I'm now down the rabbit hole of 'let to buy'! Perhaps that's what you mean by consumer BTL?

Seems all possible for 5 or 10y I'm just trying to predict as best as possible risk which of course is neigh impossible when looking into the future!

dimbo61

Sorry romantix what I was trying to say was if you take out a new 10 year fix at say 70%LTV they won't let you transfer it to a new property at 90%LTV.
You really need the help and advice of a good broker to sort out the 2 mortgages you require 

amnblog

Romantic, this talk of half a mortgage and 10 year fixes suggests to me you are going to shoot yourself squarely in the foot here.

Do yourself a favour and engage a mortgage broker to assist you.

K_S

@romantix Yes, you are indeed looking at a 'let-to-buy' with Lloyds doing the residential purchase and a different lender doing the BTL remortgage. From what you say, it looks like Lloyds is ok with it but I would definitely try and get it in writing before relying on it. Just to be clear, it's not uncommon with other lenders, I had a let-to-buy client who ported his mortgage with HSBC and re-mortgaged his current flat to a BTL. HSBC were fine with that, they would only do it direct though and there were a few quirks with regard to affordability calculations.

The main risk with porting is that you need to meet the lender criteria (affordability, property, etc.) at that point in time in the future, so if (for whatever reason) you don't then you may end up with no option but to stay put or stump up the ERC. Unfortunately, I see this more often that I would like to, especially in the last two years when lenders radically changed criteria due to the pandemic!

Unless I've misread your post (in which case just ignore this sentence), it looks like you want the predicted rental income to be considered for affordability? Very few lenders do that with a let-to-buy, so do make sure Lloyds does and what exactly they need for that to happen.