Can someone please clarify what happens when you port a mortgage (specifically to the sale proceeds)?

Which is correct in the following scenario, a or b? I'm really confused now.

Current Mortgage = 150k
House Sale = 250k
Savings = 150k

example A:
Amount available for new house = Current Mortgage + Sale Proceeds + Savings = 150k+250k+150k = 550k

example B:
Amount available for new house = Current Mortgage + Equity + Savings = 150k + 100k + 150k = 400k

Asked by nicola.idlebanks

2 Answers

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Answered by trevor mackey, IFA
Example b is correct. you need to check the terms and conditions of existing mortgage as there may be timescales you need to meet between selling current home and completing on new home. Dont forget you need to allow for all of the costs, will the lender allow the porting as they will still check affordability. The lender is likely to look upon your application an fresh application. Check the market as there may also be mortgages that might be more suitable for you. hope this helps. | 04.13.11 @ 11:43
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$commenter.renderDisplayableName() — {comment} | 08.16.17 @ 21:53
Answered by Darren Smith, IFA in Basingstoke, HAMPSHIRE
trevor is right.

in example A you have counted the mortgage value twice as the sale proceeds are really the net 250k minus the mortgage 150k but you have counted the mortgage twice.

all lenders will treat this as a brand new mortgage so you could find that even your current lender declines the loan on a new property and this could be because you no longer fit their underwriting criteria on income or loan amount or that the new property is not adequate security.

remember, a mortgage is a loan facility on one set property. its not like having a personal loan whereby you just tell the lender you have moved home and they send the statements elsewhere. | 04.13.11 @ 19:12
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$commenter.renderDisplayableName() — {comment} | 08.16.17 @ 21:53
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