Mortgage - how much to request on top of porting?
Discussion
Hi all,
I've got an appointment with mortgage advisor in a couple of weeks time who will hopefully answer this definitively, but thought I'd try to pre-arm myself with the answer here first.
I'm trying to figure out how much to ask for on an additional mortgage. Situation is that we have had offer accepted on a house, and selling our own. New place is more expensive than current home, and therefore additional borrowing needed. Current mortgage still has some time to run on fix term and therefore plan to port it (rather than pay high early repayment charges) and add second mortgage to make up the difference. So far so good.
The question is though how much to ask for on the second mortgage, as the outstanding balance to be transferred on the existing one is continuing to change and we don't have a set moving date yet. Numbers are, house price £1.1m, looking at 20% deposit, so need 880k mortgage. Remaining balance of current mortgage is around 395k. So logic dictates that need to ask for 485k to make up the difference. But by the time we move we'll have had x months of payments and interest changing the 395 to a different number, and because we don't have a moving date it is impossible to calculate this. So do we have to just request an arbitrary number (say 490k for new one) and then make up the difference in cash on completion if different? Seems a bit of a blunt way to do it? I'm also conscious that if we accidently borrow too much then it'll inadvertently knock us into a different LTV bracket, so maybe better to only ask for the 485k and end up more like 79% LTV?
Sarnie or other experts, do lenders have a clever way to make this a bit more accurate and/or change the lending amount dynamically depending on completion date? Both mortgages would be with same lender if that makes any difference.
I've got an appointment with mortgage advisor in a couple of weeks time who will hopefully answer this definitively, but thought I'd try to pre-arm myself with the answer here first.
I'm trying to figure out how much to ask for on an additional mortgage. Situation is that we have had offer accepted on a house, and selling our own. New place is more expensive than current home, and therefore additional borrowing needed. Current mortgage still has some time to run on fix term and therefore plan to port it (rather than pay high early repayment charges) and add second mortgage to make up the difference. So far so good.
The question is though how much to ask for on the second mortgage, as the outstanding balance to be transferred on the existing one is continuing to change and we don't have a set moving date yet. Numbers are, house price £1.1m, looking at 20% deposit, so need 880k mortgage. Remaining balance of current mortgage is around 395k. So logic dictates that need to ask for 485k to make up the difference. But by the time we move we'll have had x months of payments and interest changing the 395 to a different number, and because we don't have a moving date it is impossible to calculate this. So do we have to just request an arbitrary number (say 490k for new one) and then make up the difference in cash on completion if different? Seems a bit of a blunt way to do it? I'm also conscious that if we accidently borrow too much then it'll inadvertently knock us into a different LTV bracket, so maybe better to only ask for the 485k and end up more like 79% LTV?
Sarnie or other experts, do lenders have a clever way to make this a bit more accurate and/or change the lending amount dynamically depending on completion date? Both mortgages would be with same lender if that makes any difference.
When we moved and ported using the same mortgage lender, all they did was provide a second "further advance" mortgage to bridge the gap between the sale value of our old property and the sale amount of the new property.
Any mortgage payments you're currently making are being deducted from the original mortgage. Once completion happened, we had two direct debits each month, one continuing the existing mortgage arrangement and the second to pay off the further advance amount.
So it doesn't matter whether you complete in a few months or a few weeks, your existing repayments are still being directed at the existing mortgage arrangement and reducing the amount there. The idea of porting is that you are porting your existing mortgage conditions from one property to another.
Any mortgage payments you're currently making are being deducted from the original mortgage. Once completion happened, we had two direct debits each month, one continuing the existing mortgage arrangement and the second to pay off the further advance amount.
So it doesn't matter whether you complete in a few months or a few weeks, your existing repayments are still being directed at the existing mortgage arrangement and reducing the amount there. The idea of porting is that you are porting your existing mortgage conditions from one property to another.
Edited by eltawater on Tuesday 10th May 14:03
Voguely said:
Hi all,
I've got an appointment with mortgage advisor in a couple of weeks time who will hopefully answer this definitively, but thought I'd try to pre-arm myself with the answer here first.
I'm trying to figure out how much to ask for on an additional mortgage. Situation is that we have had offer accepted on a house, and selling our own. New place is more expensive than current home, and therefore additional borrowing needed. Current mortgage still has some time to run on fix term and therefore plan to port it (rather than pay high early repayment charges) and add second mortgage to make up the difference. So far so good.
The question is though how much to ask for on the second mortgage, as the outstanding balance to be transferred on the existing one is continuing to change and we don't have a set moving date yet. Numbers are, house price £1.1m, looking at 20% deposit, so need 880k mortgage. Remaining balance of current mortgage is around 395k. So logic dictates that need to ask for 485k to make up the difference. But by the time we move we'll have had x months of payments and interest changing the 395 to a different number, and because we don't have a moving date it is impossible to calculate this. So do we have to just request an arbitrary number (say 490k for new one) and then make up the difference in cash on completion if different? Seems a bit of a blunt way to do it? I'm also conscious that if we accidently borrow too much then it'll inadvertently knock us into a different LTV bracket, so maybe better to only ask for the 485k and end up more like 79% LTV?
Sarnie or other experts, do lenders have a clever way to make this a bit more accurate and/or change the lending amount dynamically depending on completion date? Both mortgages would be with same lender if that makes any difference.
You are over thinking it.I've got an appointment with mortgage advisor in a couple of weeks time who will hopefully answer this definitively, but thought I'd try to pre-arm myself with the answer here first.
I'm trying to figure out how much to ask for on an additional mortgage. Situation is that we have had offer accepted on a house, and selling our own. New place is more expensive than current home, and therefore additional borrowing needed. Current mortgage still has some time to run on fix term and therefore plan to port it (rather than pay high early repayment charges) and add second mortgage to make up the difference. So far so good.
The question is though how much to ask for on the second mortgage, as the outstanding balance to be transferred on the existing one is continuing to change and we don't have a set moving date yet. Numbers are, house price £1.1m, looking at 20% deposit, so need 880k mortgage. Remaining balance of current mortgage is around 395k. So logic dictates that need to ask for 485k to make up the difference. But by the time we move we'll have had x months of payments and interest changing the 395 to a different number, and because we don't have a moving date it is impossible to calculate this. So do we have to just request an arbitrary number (say 490k for new one) and then make up the difference in cash on completion if different? Seems a bit of a blunt way to do it? I'm also conscious that if we accidently borrow too much then it'll inadvertently knock us into a different LTV bracket, so maybe better to only ask for the 485k and end up more like 79% LTV?
Sarnie or other experts, do lenders have a clever way to make this a bit more accurate and/or change the lending amount dynamically depending on completion date? Both mortgages would be with same lender if that makes any difference.
You apply for the amount you need at the point of application,
Lenders do not change the figures based on changing balances etc etc...
Sarnie said:
You are over thinking it.
You apply for the amount you need at the point of application,
Lenders do not change the figures based on changing balances etc etc...
Thanks Sarnie, although my point is that if I ask for 495k at the point of application in May, then actually move in August (for example), by that point I've paid another 3 months of repayments on the existing mortgage, taking it from 395 to 390(ish) which is being added to the 495, which means the balance to be ported will then sum with the 495k to 875k not the 880k required. And so surely this needs to be modelled in to ensure that at the time of completion the new mortgage + old porting mortgage = 80% of purchase value? If lenders aren't taking this into account then won't we then be short and have to end up stumping up more cash?You apply for the amount you need at the point of application,
Lenders do not change the figures based on changing balances etc etc...
Assuming you are selling your house for more than you originally bought it for:
1) Your buyers are handing you a block of [cash A] in exchange for the keys to your current house.
2) You need block of [cash A] + [mortgage advance B] to make up the [sale price C]
3) You hand over [sale price C] to your vendor who gives you the keys to your new house
It doesn't matter what proportions of [cash A] are your original mortgage amount, your current outstanding mortgage amount and equity due to a price increase. You still need ALL of [cash A] to go towards [sale price C] to hand over to your vendor.
1) Your buyers are handing you a block of [cash A] in exchange for the keys to your current house.
2) You need block of [cash A] + [mortgage advance B] to make up the [sale price C]
3) You hand over [sale price C] to your vendor who gives you the keys to your new house
It doesn't matter what proportions of [cash A] are your original mortgage amount, your current outstanding mortgage amount and equity due to a price increase. You still need ALL of [cash A] to go towards [sale price C] to hand over to your vendor.
Voguely said:
Thanks Sarnie, although my point is that if I ask for 495k at the point of application in May, then actually move in August (for example), by that point I've paid another 3 months of repayments on the existing mortgage, taking it from 395 to 390(ish) which is being added to the 495, which means the balance to be ported will then sum with the 495k to 875k not the 880k required. And so surely this needs to be modelled in to ensure that at the time of completion the new mortgage + old porting mortgage = 80% of purchase value? If lenders aren't taking this into account then won't we then be short and have to end up stumping up more cash?
You apply for what you "need" at time of buying - current settlement + additional funds to £880k. Then you just get an up to date settlement at the time of moving/completion and re-do the sums at that point, meaning you'll be borrowing less than you originally applied for Gassing Station | Finance | Top of Page | What's New | My Stuff