Mortgage penalty fees and porting

[4D]

What's the general rule for penalty fees on a mortgage if you end up moving house before you get to the end of your fixed term?

Example. If you have a penalty of 2.5% of the loan value and that is locked in for two years,  if you move house after say 20 months will you still have to pay a full 2.5% of the loan value OR is it amortised OR can the loan be ported?

Ta.

[Samdy Gray]

Depends on the terms of the original mortgage offer. Could be a % of the original loan or the outstanding balance.

It may be portable. Who's the mortgage with?

[4D]

Just had a read, 2.5% charged at any period within 24 months,  on initial loan value within 1st year then after 1st year based on balance at calendar year end. You can port it though. If the product was based on a particular LTV then would those criteria need to be met to port it?

[jimmy_onions]

funnily enough I am currently looking at similar thing. My mortgage is with santander, spoke to one of their guys today.

I learnt two things

1) If I want to take out a new mortgage which is of same value or higher than current, and there are 6 months or less on my current fixed term, they will waive the early redemption fee (although this is just an offer santander have on at the mo)

2) If I just wanted to port the mortgage per se without changing it, the max LTV they would allow on the new house is 90% (and original mortgage was taken out with LTV much lower than that)

However, both these are possibly unique to Santander, you need to call your provider and speak to them about their particular terms...

hope this helps

[Samdy Gray]

If the new house is greater in value and you're borrowing the same or more then it's not an issue, your existing terms remain the same. Any additional borrowing would be on a new product at the relevant rate for the LTV.

Who's your current lender? Some are ok with porting, some do anything they can to stop you.

[jimmy_onions]

Samdy brings up a good point...if the house you are looking to buy is greater in value than your current house purchase price, then I should imagine you will have a decent few options to port mortgage, extend mortgage or whatever, in order to avoid paying redemption fee..
but if the new house value is less, and your LTV value increases, you may have more difficulty, that said though, see my 90% example above...

[Samdy Gray]

funnily enough I am currently looking at similar thing. My mortgage is with santander, spoke to one of their guys today.

I learnt two things

1) If I want to take out a new mortgage which is of same value or higher than current, and there are 6 months or less on my current fixed term, they will waive the early redemption fee (although this is just an offer santander have on at the mo)

2) If I just wanted to port the mortgage per se without changing it, the max LTV they would allow on the new house is 90% (and original mortgage was taken out with LTV much lower than that)

However, both these are possibly unique to Santander, you need to call your provider and speak to them about their particular terms...

hope this helps

Santander are one lender who are quite reluctant to port a mortgage.

If you do have less than 6 months on your deal, then either wait 6 months to avoid penalties, or it may be worth having a look to see whether you could save money by taking a new cheaper mortgage with another lender. Send me a PM if you want to have a chat.

[4D]

Nationwide. What if I get a cheaper house but port the loan, is that allowed? Or could I port a smaller loan balance and repay a big chunk?

[Samdy Gray]

Nationwide. What if I get a cheaper house but port the loan, is that allowed?

Generally when people port to a lower value house it's to reduce the mortgage balance. I know with Nationwide if you port and reduce the level of borrowing, you pay the ERC on the difference between the current outstanding mortgage and the new loan.

[4D]

So if you reduce the capital borrowing by £50k for example,  you would be charged 2.5% of £50k? £1250.

[Samdy Gray]

Yes.

[4D]

Thanks