Porting my mortgage?!

[phoenixtherabbit]

Can anyone tell me how this actually works?!

I'm with santander. The outstanding amount of my mortgage is 79,600 and a few pence. My house is (supposedly) worth 95000.

I want to sell it and buy something of a similar value I think or maybe a bit more, depends what comes up to be honest.

Anyway, I'm looking into porting the mortgage for two reasons 1) the rate is pretty good and 2) the early repayment charges are huge and I'd like to avoid them.

So how does it work?

I sell my house for 95000, so I have £15400 equity right?

What happens to that £15400? Does it just go as the deposit on a new house, or could I use say £12,000 as the deposit and use the rest to pay solicitors / estate agents? Or because I'm porting do I not have the choice and the full balance (equity and owed) goes to the new house?

So say I can use the £12000 as a deposit and I'm buying a £120,000 (for simplicity with it being 10%) I would need to borrow £28,400. Can I do that? Or would I be limited to buying a house of exactly the same value as mine and having to find the money for solicitors fees somewhere?

My original mortgage was a 5% deposit one if that helps?

I'm completely confused and I can't seem to find any info on it. I will probably have to ring santander I know, but I find things a lot clearer written down!

I feel completely thick when it comes to things like this! A mortgage advisor did everything for my original mortgage so I really haven't got a clue!

I ported our Santander mortgage so can help a bit. You can use the equity as a deposit or fees if you wish. We agreed additional lending with Santander so in effect had two mortgages - our ported one and the additional money, but they worked affordability and repayments as one. I fixed my additional mortgage so that the deal ends at the same time as the old one and then I will bring them together on to the same deal (our old rate was not great but mortgage was smaller)

Ah right so I can use some of the equity then. That's good because I don't really have the money to pay upfront for estate agents etc.

Will they do another credit check etc? I'm going back to work full time in September, but it means my child care bill will be higher too... I earned less but didn't have childcare to pay for before. Dps wage is slightly higher I think but we also have two more children living here than we did!

I looked at mortgage calculators which say we could borrow a ridiculous amount but they're not taking into consideration the £900 a month we shell out on nursery! We also have a car loan with santander as well now which we didn't have before.

I'm stressing about it and our house isn't even up for sale yet!

We ported, used some of our equity for stamp duty, sol fees and to pay off a couple of credit cards. You can do that - it's your money. They do affordability checks on whether you can afford the entire monthly repayment.

I used to be Mortgage Adviser so I am qualified to give advice...

The easiest way to think about this is that you will be applying for a brand new mortgage, that is how it will be viewed by the bank. If you choose to apply for that mortgage with Santander and port your mortgage, they will waive the early repayment charges (ERAs), if you keep your existing rate.

If your new house is £120,000, and you want to borrow £108,000 then £79,600 will be borrowed on your existing mortgage deal, and £28,400 will need to be on a new deal that Santander have available at the time you apply.

It is normal to use some of your equity to pay the deposit and the rest to pay fees. Some costs will need to be paid upfront - solicitors will probably want a few hundred and you will need to pay for a survey on the new property you're buying. Most of the big bills, such as Estate Agents fees and Stamp Duty don't need to be paid until after Completion though.

On Completion, the people buying your house will send their money to your solicitor, and Santander will send the whole £108,000 to your solicitor too. They will send the money for the house you're buying on to the Vendor's solicitors and will then use the remaining money to pay their own fees, Stamp Duty, Estate Agents etc. If they need more, they will tell you and you will need to send it to them before you Complete, if there's money left over the solicitor will send it to you once everyone else has been paid. They will send you a statement breaking down who has had what and why.

You can use a Mortgage Adviser for this again, you don't have to DIY. Either Santander will be able to help, or an independent mortgage adviser. If you liked the adviser you used last time then it's probably not a bad idea to approach them again.

Ah brilliant! That's a great explanation thank you! I sort of thought because I was staying with Santander that I was on my own with it! I suppose I will just have to ring them and see What they say with regards to how much we can borrow then.

Is it the same as first time buying that I should get a decision in principle before putting any offers in?

And sorry another question! Is it reasonable to offer on another house before we have an offer on ours or would I get laughed out of the estate agents?

It's a good idea to have a DIP done first, mainly for your own peace of mind. It is purely a credit score so will be subject to full Underwriting. With the changes in your circumstances since last time and the changes coming soon it would be a particularly good idea to get your ducks lined up beforehand, so you can set a realistic budget. It is possible that Santander may set conditions, such as wanting you to have actually gone back to work first too. Without asking the question, you won't know... but it's better to know upfront before you fall in love with a dream house.

Regarding your sale, you really should have yours on the market. It gives the impression you're not serious otherwise and there would be a certain amount of eye rolling behind your back. Not a big deal if you don't have an offer but be prepared that a Vendor will probably not agree to take their house off the market, even if they've provisionally accepted your offer, until you have a complete chain below.

I'm working part time at the minute but going back full time in September with potentially more per hour pay wise. My childcare bill will go up proportionally too. Am I best waiting until then to speak to them?

I imagine my employer would be happy to give evidence that they are having me back full time and from what date with what pay etc? I don't know whether that's something Santander would accept.

We're just getting ours ready to go up. Just fixing minor cosmetics and I wouldn't offer on anything until it was at least up for sale I just didn't know what the done thing was really!

I understand about people preferring the chain below to be complete. I suspect ours will be bought by an investor as most of our street is owned by landlords I believe.

Thank you for your help you have been fantastic!