Paying off the Loan/Porting/ERC/ Opinion on Ts and Cs.

MartyZiff

Hi, First time posting. I was hoping I could get an opinion on the below.

I am planning on moving home. Have sale agreed on both my property and on the property I am buying. The new property is more expensive and I will require additional borrowing. 

With a good wind I believe the sale could complete August/September however I am on a fixed rate with my current lender until 1st Oct and so moving before will result in an early repayment charge (ERC) of 1% of the outstanding loan. 

This is annoying for the sake of such a short period of time. I have been told I can port the loan but this will leave me with two products and all the headaches that can cause. My understanding was as you approach the end of a fixed rate you can negotiate a new deal and if moving they can offer you new product on the whole amount of the loan and you avoid the early repayment charges. However the customer service team have told me this isn't the case. 

I have checked through the mortgage terms and conditions and have linked them below, I believe condition 11.11 describes exactly what I want to do but I am being told it's describing porting. When I point out that porting is covered in section 17 of the same conditions they just tell me I am wrong. 

My understanding of is porting is when you move or transfer the existing loan to the new property however what I want to do is repay the loan with the sale of the property and take out an entire new product. I believe the distinction can been seen in condition 17.4 vs 17.6

The lender is Danske Bank because I have just joined the forum I can't post a link however I have copied the relevant section below or if you are feeling particularly helpful you could google - "Danske Bank mortgage general terms and conditions"

 11.11 Additional rules if you repay your loan and move home during a fixed rate period

We will not charge you an early repayment charge if all of the following conditions apply; 
a) You move home and repay your loan in full during a fixed rate period;
b) We have agreed to give you a new loan secured over your new home; and
c) The new loan begins on the date your old loan is repaid.

I would appreciate any comment on the above, let me know if I am barking up the wrong tree or if I should try again with Danske. 

Thank you.

BarelySentientAI

MartyZiff said:

My understanding of is porting is when you move or transfer the existing loan to the new property 

That, whilst a very common understanding, is technically wrong.  What you transfer are the terms of the existing loan, including the any remaining fix period etc, but the loan itself is paid off and a new one taken.

Section 11.11 that you quote, and your description of what you want to do, both describe porting.

BarelySentientAI

YBS:


Natwest:


HOA:

MartyZiff

BarelySentientAI said:

MartyZiff said:

My understanding of is porting is when you move or transfer the existing loan to the new property 

That, whilst a very common understanding, is technically wrong.  What you transfer are the terms of the existing loan, including the any remaining fix period etc, but the loan itself is paid off and a new one taken.

Section 11.11 that you quote precisely describes porting.

Thanks for the response BarelySentientAI, 

My query with that is why then the distinction in section 17 of the terms and conditions. It describes transferring the loan as porting 17.4 and then at 17.6 refers to paying off the loan and taking a new one. 

I know other lenders allow customers to do what I am wanting. For example on Santander's website "existing customers moving home" option 2 describes how if you have less than 6 months on an existing fixed rate you can choose a new deal for the whole amount you are wanting to borrow and they won't charge ERCs providing you are borrowing the same or more and that is separate to porting which is covered as option 1 on the same webpage. 

From your reading those conditions are you of the view that I am wrong and porting/paying the ERCs would be my only option? 

Thanks again.  

BarelySentientAI

I agree with their interpretation.

You can see right from the start of that section they are talking about "the new loan" after the transfer.  This is consistent with the "pay off and take new" common definition of porting.  The use of the wording "repay" on 17.6 is referring only to the first half of the transaction, because there are no ERCs on taking a new loan, only on repaying the old one.

Santander's option 2 is just like paying off the old loan and taking a completely new one with new terms (as you would if you changed lender), so definitely not porting and resulting in only one part, but they seem to be opting to waive the ERC - an option that I don't see the DB terms supporting.