Mortgage Porting & Downsizing

soundrunner

Hi all,

Hoping someone can provide some clarity on mortgage porting & downsizing.

Have sold our property for £575,000. Our property was valued by mortgage company approx 490k so we are in the 75% loan to value bracket.

We have £367,000 outstanding on mortgage with Natwest.

We are looking to purchase a property for £425,000 but needs work so looking to free up equity to put towards the renovation.

I believe we can overpay 20% without incurring an ERC.

Would anyone be able to explain & calculate what money we would be left with for renovations taking the above into consideration? Would we be allowed to change our mortgage to a 90% LTV to maximise cash for renovations? 

Thanks in advance and apologies if silly questions.

Mark_d

You sold you property for 575k.  367k was mortgage so you released 208k cash. Maybe you had to spend some of this 208k for transaction fees, legal fees, removal fees etc.
You cash will also fall due to your purchase costs - which will include stamp duty.
You will need 42.5k as the minimum deposit to get your 90% mortgage on the new place. So I think you'd have 150k to spend on renovations

soundrunner

Mark_d said:

You sold you property for 575k.  367k was mortgage so you released 208k cash. Maybe you had to spend some of this 208k for transaction fees, legal fees, removal fees etc.
You cash will also fall due to your purchase costs - which will include stamp duty.
You will need 42.5k as the minimum deposit to get your 90% mortgage on the new place. So I think you'd have 150k to spend on renovations

Thanks so much for your help, that is very useful! If we were to change our mortgage to 90%, would they need payslips etc again or technically not as we're not borrowing anymore as such?

kingstreet

You are making a new application. All the usual credit and status checks are required.

Mark_d

soundrunner said:

Mark_d said:

You sold you property for 575k.  367k was mortgage so you released 208k cash. Maybe you had to spend some of this 208k for transaction fees, legal fees, removal fees etc.
You cash will also fall due to your purchase costs - which will include stamp duty.
You will need 42.5k as the minimum deposit to get your 90% mortgage on the new place. So I think you'd have 150k to spend on renovations

Thanks so much for your help, that is very useful! If we were to change our mortgage to 90%, would they need payslips etc again or technically not as we're not borrowing anymore as such?

It's often referred to porting a mortgage but technically it's a new mortgage because it's secured against a different property.  You'll need to go through the full application process with credit check, proof of income, valuation of the new property etc.

soundrunner

Many thanks everyone

soundrunner

kingstreet said:

You are making a new application. All the usual credit and status checks are required.

Many thanks. If we were to over pay the mortgage and remain in the same 75% LTV, would a new full application still be required as such? So effectively like for like but against the new property instead 

Hoenir

soundrunner said:

kingstreet said:

You are making a new application. All the usual credit and status checks are required.

Many thanks. If we were to over pay the mortgage and remain in the same 75% LTV, would a new full application still be required as such? So effectively like for like but against the new property instead 

Yes. The port refers to the transfer of the existing mortgage including it's terms and conditions. All new mortgage applications still have to go through the full underwriting process. As anything could have changed. 

needtowinthelottery

I suggest you speak with your mortgage lender as some of the advice you’ve been given above doesn’t tally with how it would work for us. We’re about to move house and ‘port’ our mortgage. Our provider (HSBC) has said it’s a very simple process providing the house value is the same or less (which it is). No new application needed. We would only need to go through a new application process if we were buying a house which has a higher value than the one we’re selling. Hope that helps.

MWT

needtowinthelottery said:

Our provider (HSBC) has said it’s a very simple process providing the house value is the same or less (which it is). No new application needed. We would only need to go through a new application process if we were buying a house which has a higher value than the one we’re selling. Hope that helps.

I find that advice a little surprising and at odds with HSBC's online statements:

"You’ll need to complete a new mortgage application to move mortgage rate when you're buying a new home. You'll need to meet our affordability criteria and the new property will need to meet our lending and valuation criteria."

amnblog

MWT said:

needtowinthelottery said:

Our provider (HSBC) has said it’s a very simple process providing the house value is the same or less (which it is). No new application needed. We would only need to go through a new application process if we were buying a house which has a higher value than the one we’re selling. Hope that helps.

I find that advice a little surprising and at odds with HSBC's online statements:

"You’ll need to complete a new mortgage application to move mortgage rate when you're buying a new home. You'll need to meet our affordability criteria and the new property will need to meet our lending and valuation criteria."

Lenders allow you to "port" the 'product' provided they are prepared to offer the new mortgage (lending).

In this way you can avoid cancelling the product and paying an early repayment charge (if one is due).

It is easy and common for borrowers to get the impression that when 'porting' they take the mortgage with them when they move.

This is not possible as the mortgage is secured on, and specific to, the property it was originally secured against. 

A new mortgage is always necessary even if a new product is not.