Downsizing and porting existing mortgage

xlator

We have a c.300K mortgage with Santander on a property worth c.600K (so about 50% LTV). The mortgage product/rate we're on (fixed) has a maximum LTV of 75% (so we're well within that).

Since buying the house, for various reasons (including home improvements), we've racked up a few loans and credit cards. Our plan is to downsize to something in the c.£400-450K range, keep our existing mortgage (so still below the 75% LTV limit), use some of the equity to pay off the debts, then invest/bank the rest.

I've been looking into how porting works, and it seems like we'll have to go through a new affordability assessment. I'm worried Santander might take a dim view of the other debt we've accumulated and refuse our application – even though we want to sell and downsize for the express purpose of paying off that debt.

We've been with Santander since we bought our first house in 2007. We've never missed a payment and we both have a clean payment history for all our other accounts (although less-than-perfect credit scores because of the loans/credit cards).

We've never "ported" the exact same mortgage before because, for the previous three moves, we've always borrowed more. But this time we don't want to borrow anything more, just move our existing mortgage (same amount, same rate, same terms) to a new (lower-value) property.

Is there a route out of this that would allow us to sell, immediately pay off the debt and port the mortgage? Is the affordability assessment a hard-and-fast rule? Can anyone advise what our options might be here?

Thanks!

kingstreet

Santander normally taxes affordability with debt cost even if it will be repaid on completion. You need to establish if this is going to mean you can't borrow what you need before you do anything more.

xlator

Thanks. Yes, that's my concern.

We haven't made any formal moves (like putting the house up for sale) yet. Just testing the water to see if we have a viable option.

I'm wondering if there's any way we can do this other than selling (and taking the hit on the early repayment charge) and buying again once we've repaid the debts, i.e. splitting it into two separate transactions (we could temporarily move back in with parents in the interim but this obviously isn't ideal with two teenage children and pets in tow).

kingstreet

You'll struggle by chain-breaking. Santander wants to see a debt off your credit report for three months before it will ignore it for affordability, but;-

Non-Simultaneous Sale & Purchase

"If the purchase of the new property completes within 3 months (6 months for a new build property) of the redemption date of the existing mortgage, then your client can port the existing product to the new mortgage where they meet our key criteria. 

• Your client must port the whole amount across to the new property to get a full ERC refund.
• This doesn't include Flexible Offset mortgages which must redeem and complete on the same day (simultaneous).

Borrowing the same or more
On redemption of the existing mortgage, the ERC is paid in full. We'll automatically send your client any refund due within 4 weeks of completion of the new mortgage.

Borrowing less
On redemption of the existing mortgage, the ERC is paid in full. If the new mortgage is less than the existing mortgage, the ERC refund will be a proportionate amount. This means we’ll only refund an ERC on the amount they have ported. For example, if their current balance is £100,000 and the new mortgage will be £90,000, we’ll refund an ERC on the £90,000. For more information, see our Existing Santander mortgage customers moving home guide."

https://www.santanderforintermediaries.co.uk/products-and-criteria/moving-home