Portable mortgage, seems unreasonable?
Discussion
Super brief summary.
Current deal coming to an end. Need to renew, really for 5 years, but at the same time, resonably likely to move before then, but difficult to know given the state of the world.
Current lender offering good rates, no checks, just sign on the dotted line.
However, the penalty is a flat 5% if you end it early. They pointed out its portable, so could be transferred to another house.
But it seems that to do so will require a new application, which may of course not be approved for any reason of their making. So they refuse and i have to pay the penalty. Even it if it was a week prior to the end of the 5 years.
On face value it seems a bit of a one sided arrangement.
Am i missing something, or is it a crap offering?
Current deal coming to an end. Need to renew, really for 5 years, but at the same time, resonably likely to move before then, but difficult to know given the state of the world.
Current lender offering good rates, no checks, just sign on the dotted line.
However, the penalty is a flat 5% if you end it early. They pointed out its portable, so could be transferred to another house.
But it seems that to do so will require a new application, which may of course not be approved for any reason of their making. So they refuse and i have to pay the penalty. Even it if it was a week prior to the end of the 5 years.
On face value it seems a bit of a one sided arrangement.
Am i missing something, or is it a crap offering?
What a lot of people don't realise is that when you port your mortgage you essentially have to re-apply for your own mortgage when you want to move house. So you have to satisfy the lenders lending criteria at the point of porting, which may have changed from when you took out the mortgage.
Or your circumstances could have changed; new job, additional kids, going self-employed.
Or the lender may not like the type of property you are buying or the LTV.
That being said, the terms and conditions are clearly laid out by all lenders when you take out the mortgage. If you don't like the ERC's you can seek out a product with no ERC's if a move is imminent, to give yourself maximum options.....
Or your circumstances could have changed; new job, additional kids, going self-employed.
Or the lender may not like the type of property you are buying or the LTV.
That being said, the terms and conditions are clearly laid out by all lenders when you take out the mortgage. If you don't like the ERC's you can seek out a product with no ERC's if a move is imminent, to give yourself maximum options.....
Sarnie said:
What a lot of people don't realise is that when you port your mortgage you essentially have to re-apply for your own mortgage when you want to move house. So you have to satisfy the lenders lending criteria at the point of porting, which may have changed from when you took out the mortgage.
Or your circumstances could have changed; new job, additional kids, going self-employed.
Or the lender may not like the type of property you are buying or the LTV.
That being said, the terms and conditions are clearly laid out by all lenders when you take out the mortgage. If you don't like the ERC's you can seek out a product with no ERC's if a move is imminent, to give yourself maximum options.....
Thanks. Or your circumstances could have changed; new job, additional kids, going self-employed.
Or the lender may not like the type of property you are buying or the LTV.
That being said, the terms and conditions are clearly laid out by all lenders when you take out the mortgage. If you don't like the ERC's you can seek out a product with no ERC's if a move is imminent, to give yourself maximum options.....
As i see it, there is no incentive for them to approve it is there? Especially if rates have gone up by the time i move.
If they approve it, they gain nothing. If they refuse, they collect the 5% penalty and can try and flog you a new mortgage at a higher rate. Maybe im to cynical?
Anyway, you have PM.
monkfish1 said:
Thanks.
As i see it, there is no incentive for them to approve it is there? Especially if rates have gone up by the time i move.
If they approve it, they gain nothing. If they refuse, they collect the 5% penalty and can try and flog you a new mortgage at a higher rate. Maybe im to cynical?
Anyway, you have PM.
The incentive for them is to retain your business. They'd rather the interest on your mortgage for the next 25 years than 5% ERC.As i see it, there is no incentive for them to approve it is there? Especially if rates have gone up by the time i move.
If they approve it, they gain nothing. If they refuse, they collect the 5% penalty and can try and flog you a new mortgage at a higher rate. Maybe im to cynical?
Anyway, you have PM.
They wouldn't refuse it, charge you the ERC and then provide you with a higher rate mortgage. They would either approve to the porting or not.
Hi
I was asking something similar on another thread and was wondering if you port sometime during the next 5 year fixed period but wanted to borrow more to buy a more expensive house but would still remain comfortably within the LTV, would a bank refuse the extra lending if interest rates have increased in the interim?
My currently thinking round this would be to look at getting the cash upfront now if possible ready to move later. That would then only leave the porting issue mentioned above that hopefully would then be routine.
Cheers
I was asking something similar on another thread and was wondering if you port sometime during the next 5 year fixed period but wanted to borrow more to buy a more expensive house but would still remain comfortably within the LTV, would a bank refuse the extra lending if interest rates have increased in the interim?
My currently thinking round this would be to look at getting the cash upfront now if possible ready to move later. That would then only leave the porting issue mentioned above that hopefully would then be routine.
Cheers
RAB2000 said:
Hi
I was asking something similar on another thread and was wondering if you port sometime during the next 5 year fixed period but wanted to borrow more to buy a more expensive house but would still remain comfortably within the LTV, would a bank refuse the extra lending if interest rates have increased in the interim?
My currently thinking round this would be to look at getting the cash upfront now if possible ready to move later. That would then only leave the porting issue mentioned above that hopefully would then be routine.
Cheers
Lenders do not decline a porting application simply because rates have gone up.I was asking something similar on another thread and was wondering if you port sometime during the next 5 year fixed period but wanted to borrow more to buy a more expensive house but would still remain comfortably within the LTV, would a bank refuse the extra lending if interest rates have increased in the interim?
My currently thinking round this would be to look at getting the cash upfront now if possible ready to move later. That would then only leave the porting issue mentioned above that hopefully would then be routine.
Cheers
RAB2000 said:
Thanks Sarnie - is that still the case if you're asking to borrow more (but within LTV / affordability type checks)?
If you don't meet their lending or affordability checks at the time of porting then yes, they can of course decline you. You are essentially applying for a new mortgage but just taking the rate with you to the new place.But, lenders don't decline applications just because rates have gone up and they want you off the current rate.
I can only speak from recent experience. Son splits with girl friend, 8 months to run on 2 years term. Settle up and pay the early termination fee.
Son then buys another house, mortgage adviser believes he can have the same deal and his early redemption fee back if new mortgage is in place within 3 months.
Lender confirms early redemption fee would be refunded and write to the now ex-girlfriend informing her of the refund if sale does head with him solely on the mortgage.
So they had joint mortgage, it's moving to him and the mortgage provider will still return the early redemption fee. What I don’t know is if all the fee is returned or just the proportion of the value of the new smaller mortgage.
Either way seems a more than reasonable approach and pleasant surprise to my son, who had written off all the money. The lender does not appear to be looking for a get out to make a quick profit.
Son then buys another house, mortgage adviser believes he can have the same deal and his early redemption fee back if new mortgage is in place within 3 months.
Lender confirms early redemption fee would be refunded and write to the now ex-girlfriend informing her of the refund if sale does head with him solely on the mortgage.
So they had joint mortgage, it's moving to him and the mortgage provider will still return the early redemption fee. What I don’t know is if all the fee is returned or just the proportion of the value of the new smaller mortgage.
Either way seems a more than reasonable approach and pleasant surprise to my son, who had written off all the money. The lender does not appear to be looking for a get out to make a quick profit.
Hi all,
i thought id jump onto this thread as its a similar theme.
I currently have a mortgage that is on fixed rate and doesnt end for a few years, likelyhood is that we will plan on moving before then and so will be looking to port the mortgage (and add on extra) before the fixed rate terms ends and hopefully avoiding the ERC.
Simple calculation shows that i will need to pay an extra £450 pm when we move.
Question is, if i overpay £450 pm from now, when it comes to porting and borrowing additional funds, would the fact that i have been overpaying £450 pm show that i do not need to prove affordability or would it make it easier for the bank to approve my request?
i thought id jump onto this thread as its a similar theme.
I currently have a mortgage that is on fixed rate and doesnt end for a few years, likelyhood is that we will plan on moving before then and so will be looking to port the mortgage (and add on extra) before the fixed rate terms ends and hopefully avoiding the ERC.
Simple calculation shows that i will need to pay an extra £450 pm when we move.
Question is, if i overpay £450 pm from now, when it comes to porting and borrowing additional funds, would the fact that i have been overpaying £450 pm show that i do not need to prove affordability or would it make it easier for the bank to approve my request?
Hussein-z3ksd said:
Hi all,
i thought id jump onto this thread as its a similar theme.
I currently have a mortgage that is on fixed rate and doesnt end for a few years, likelyhood is that we will plan on moving before then and so will be looking to port the mortgage (and add on extra) before the fixed rate terms ends and hopefully avoiding the ERC.
Simple calculation shows that i will need to pay an extra £450 pm when we move.
Question is, if i overpay £450 pm from now, when it comes to porting and borrowing additional funds, would the fact that i have been overpaying £450 pm show that i do not need to prove affordability or would it make it easier for the bank to approve my request?
You will have to prove affordability no matter what.i thought id jump onto this thread as its a similar theme.
I currently have a mortgage that is on fixed rate and doesnt end for a few years, likelyhood is that we will plan on moving before then and so will be looking to port the mortgage (and add on extra) before the fixed rate terms ends and hopefully avoiding the ERC.
Simple calculation shows that i will need to pay an extra £450 pm when we move.
Question is, if i overpay £450 pm from now, when it comes to porting and borrowing additional funds, would the fact that i have been overpaying £450 pm show that i do not need to prove affordability or would it make it easier for the bank to approve my request?
When porting, you are re-applying for the mortgage you already have.
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