Mortgage Offer total borrowing differs from Mortgage Illustration (ported mortgage)

lmitchell

Hi guys, my wife and I have confused ourselves totally re. our mortgage offer and wondered if someone could put our minds at rest.

We're porting our existing mortgage and the original borrowing required was £293,600 including the existing mortgage. This was displayed in the mortgage illustration, but it was £293,230.77 when we received our formal mortgage offer a month or so later.

Why is there now a £370 difference in the total borrowing? Is this related to our ongoing servicing of the existing mortgage? Apologies if this sounds really simple/dense, but we've been overthinking it this afternoon and worried ourselves that we're going to be £370 short on completion!

ACG

Your mortgage balance changes daily. 

It comes down on the day you make your payment and then goes up every day until you make your next payment. 

But yes, it will no doubt be down to the payment(s) you have made since getting the illustration. 

kingstreet

If you are only porting and not borrowing more, there is a chance you could have a shortfall as the mortgage balance is falling each month.

Typically a new mortgage of (eg) £200,000 would be split £100k port and £100k new borrowing on a new product. As time passes, the port amount reduces so that by completion the split is £99k port and £101k new borrowing. That's a simple adjustment made by the lender.

Speak to your lender/broker to establish what is happening and how it can be rectified.

lmitchell

kingstreet said:

If you are only porting and not borrowing more, there is a chance you could have a shortfall as the mortgage balance is falling each month.

Typically a new mortgage of (eg) £200,000 would be split £100k port and £100k new borrowing on a new product. As time passes, the port amount reduces so that by completion the split is £99k port and £101k new borrowing. That's a simple adjustment made by the lender.

Speak to your lender/broker to establish what is happening and how it can be rectified.

Hi there, yes the £293,600 includes approx £168,800 port and the remainder in additional new borrowing:

£168,881.15 port and £124,349.62 (inc. product fees) = £293,230.77.

This has changed from the initial illustration of: £169,250.38 port and £124,349.62 ( inc. product fees) = £293,600.

We assumed the fall to £293,230 in the mortgage offer illustration related to the ongoing servicing of our existing mortgage, as this has fallen since initial application/illustration in Jan. This wouldn't affect the £293,600 the lender would send on the day of completion though, right?

kingstreet

No. As I explained the emphasis will be changed from ported amount to new amount. If you want peace of mind, check with your lender or broker.