Porting a mortgage

[Moancup]

I have a shared ownership mortgage (in my name only) which is approaching the end of its fixed term. I am (hopefully) about to sell my flat and DP and I will take out a standard mortgage together. I can afford to repay the mortgage now in its entirety but that will heavily eat into my savings.

How much hassle is it to port a mortgage if going from one borrower to two?

Should I just pay off the mortgage and accept that what’s left of my savings will be eaten up by stamp duty and legal fees?

When you move you have to take out a new mortgage: the proceeds of your sale pay off your old one and anything leftover is the equity/balance between the new property price and the mortgage. Thus new mortgage can absolutely be in joint names.

I'm not quite sure what you mean about paying off existing mortgage with savings?

Last time I spoke to a mortgage adviser they said that I shouldn’t worry about paying off the mortgage and incurring an early repayment fee when I moved as it would be easy to transfer (port) my existing loan to the new place and take out a second advance for the remainder. They made it sound like that’s the standard practice but I’m not sure if that’s the case.

In terms of paying it off, I mean should I just pay off the mortgage on my current flat now ahead of moving.

Ah, so you want to transfer the deal (fixed rate eg so as to avoid early redemption fees) plus further borrowing plus add borrower.

From what I remember it can be done (or it was by the lender I worked for) but it was a ballache from the admin side, but that's not your concern. Speak to your lender to confirm what the best plan is.

How long is left on your deal? Is it THAT good that it's worth porting to change in the future (you'll prob have to pay additional fees to secure another deal in addition to the further borrowing amount mortgage) or would it be better to pay off redemption fee and just get one consolidated deal?

(it's confusing when you say you're going to pay off the mortgage when you mean pay off the early redemption fee, or at least it is to my tired brain)

Plus if you're close to the end of the term (3 months) they may waive the fee if you're taking out another product. Speak to the lender directly rather than a broker who won't know all the intricacies of their systems and still take a commission

Why would you want to pay it off now if there's a redemption penalty?

The deal is about to expire and I need to decide whether to renew, knowing that I hope to have moved in six months or so, just let it slide to the standard rate, or pay it all off now.

But good point, from the research I’ve done I’d actually get a better deal starting afresh. I think I’m getting too hung up on the early redemption fees.

(The redemption fee wouldn’t apply if I pay it off when the deal ends in two months.)

@Moancup

(The redemption fee wouldn’t apply if I pay it off when the deal ends in two months.)

Pay WHAT off?

The outstanding balance on the mortgage.

Why do you have to pay off the outstanding balance?

We are moving and porting our existing mortgage (2 years left of a 5 year fixed fee) we are then taking out a second mortgage with the same company for the difference as our new property is more. We are having g this fixed on a 2 year basis so they will both be up for renewal at similar time.

So if the deal is about to expire why are you thinking about redemption penalties which won't apply, and porting when you're not tied in to a product?

Just leave it as it is, you'll go onto your lender's standard variable rate.

Up to you whether you pay it all off once your deal finishes, but sensible financial planning means you should have at least three months salary in savings, and if you're planning to move you'll need savings for surveys, searches, removal vans etc.

@Couldhavebeenme3

Why do you have to pay off the outstanding balance?

I don’t have to. I’m just trying to work out of its sensible to clear it and not have the hassle of switching deal again when I know I want to move.

The outstanding mortgage gets paid off when you sell - that's where the money goes. So unless you're in negative equity, nothing should eat into your savings. Unless you mean pay it all off so there's no mortgage and then sell it, but that seems unnecessary when you're selling it anyway.

Once your fixed term ends, you will go onto the lender's variable rate. You don't have to take out a new fixed deal, although your mortgage payments will probably go up a bit, depending on what rate you had fixed at.

@titchy

So if the deal is about to expire why are you thinking about redemption penalties which won't apply, and porting when you're not tied in to a product?

Just leave it as it is, you'll go onto your lender's standard variable rate.

Up to you whether you pay it all off once your deal finishes, but sensible financial planning means you should have at least three months salary in savings, and if you're planning to move you'll need savings for surveys, searches, removal vans etc.

The jump to the SVR is large, over 2 percentage points, so I don’t know if the hike in interest rates is best avoided by switching to a new deal for the six months or more it will take to sell. I need to get a calculator out and work out the extra interest rate cost 💲 f doing nothing versus the cost of an early repayment clause on a new deal. And speak to a financial adviser but getting an appointment is proving difficult at the moment!

Does your lender (or any other lender) so just six month deals though? And don't forget deals usually cost.

Yes @SylvanasWindrunner I mean pay it all off. Interesting you think that’s unnecessary, I was expecting people to say always clear debt if you can. But I suppose I’m only - hopefully - talking about a few months.

OK, so say your current mortgage is for £50k, you pay £500 a month on a fixed rate which is ending very soon.

You can take out a new deal on the £50k when your current deal ends, and port it and take out further borrowing (with further fees if you want a deal on that too) when you move in 6 months.

Or, you could just go onto the standard rate on your current mortgage for a couple of months and take out ONE mortgage deal when you move, which is on your outstanding £50k plus whatever extra is needed all in one go, one set of fees, and add dp on at the same time.

At no point do you have to clear the £50k balance? And if your current deal expires in the next couple of months the redemption fees won't apply?

No Titchy it would have to be a longer deal, hence not knowing whether it’s worth signing up to a new deal when I know I’ll need to break it early. But it’s paying 1.14% on a fee free deal versus 3.59% on the standard mortgage rate.

Correct @Couldhavebeenme3. Clearing the whole balance would be a choice if it’s a better option than the first two (option 1 new deal with intention to port, option 2 just leave it until I actually move).

2% increase for a few months is unlikely to be a massive difference.

Absolutely unheard of to completely pay off your mortgage (there will be completion fees, deeds release/storage fees etc) whilst you're in the process of selling and getting another mortgage, and way beyond the affordability of anyone I've dealt with.

Also, many lenders offer better deals to existing borrowers, worth some research on MSE or comparison sites. What's your outstanding balance and remaining term?

Ok that’s really helpful, thank you. I can afford it as there’s less than £50k left, but I didn’t know it was so unusual and triggered other complications.

Oh, and please ensure your proportion of the equity is protected when you buy with dp, otherwise this thread will be meaningless should things ever turn sour.