Avoiding ERC with Mortgage Port

niko213

Hi,

I'm selling a property at 250k to purchase at 225k and as I've only recently renewed my mortgage with Halifax I'm looking to port my mortgage to avoid any ERC.

Halifax does state that if I'm borrowing less I'd need to pay an ERC. Is there any way in which I port this mortgage as it is, borrowing the same under the same conditions, therefore not borrowing less if that makes sense?

And if it is possible, what does that mean in terms of Cash in pocket post sale, equity etc? 

My head is fried right now and I can't do the numbers let alone consider the consequences.

Any help / suggestions greatly appreciated. The ERC would only be 1.25k but still better in my pocket. Thank you.

kingstreet

That depends on the size of the mortgage. You've only told us one property is cheaper than the other.

niko213

175ish give or take.

kingstreet

Ok. To avoid payment of any ERC you would need to port the full amount you owe to a new mortgage on the new property. If you wish to reduce the amount of your new mortgage, a proportionate ERC will be payable based on the reduction in borrowing.

EG if you cut the mortgage by £25k and the ERC this year is 2%, the ERC payable will be £500.

niko213

Thank you, and again, please forgive my stupidity for this next question.

Having purchased the property at 235. Assuming with 175 remaining on the mortgage would mean circa 60k equity?

So if I port the entire remaining balance, this would mean, 175 borrowed against 225. 50k deposit, 10k equity released???

kingstreet

What you paid for the property you are selling isn't relevant to this equation.

You are selling for £250k and will repay a £175k mortgage leaving residual equity of £75k for your onward purchase. If you buy for £225k with £175k mortgage after the £50k "deposit" that will leave you £25k (less fees/costs.)