Hi all
I am hoping a member on here can provide some advice re the porting of an existing mortgage.
In short I have a good life-term interest-only tracker mortgage taken out just before the economy went tits up back in 2009 when BE base rate was 5.5% with a very good (ie low) premium over BBR. I am now in the process of upsizing and intend to port the mortgage over to the new property (just about afford it without taking on additional borrowing due to (some) capital growth in the last 12 years). My mortgage company is Hinckley & Rugby and I know they wanted shot of this mortgage ASAP - they have already been making zilch profit out of this mortgage for some years now with the BBR at only 0.5%. There is still another 8 years term to go before the mortgage is due.
The problem when I enquired about the porting of the said mortgage I was told that this is OK (the mortgage term does say that I can move the mortgage to another property if I subsequently move house), but due to the fact that H&R no longer provide interest-only mortgage for residential customers, they have to change it to a repayment mortgage - which isn't exactly what I wanted as there is only an 8 years terms remaining.
I have challenged their decision on the basis that what products they currently market or not should have not bearing on an existing, contractual agreement, which does allow for the porting of an existing mortgage. This is the reply i got from H&R:
"The porting of the mortgage would entail you applying and creating a new mortgage, incorporating the terms prescribed under the FCA's regulations. Although the terms of the product will be ported, it is emphasised that as a new mortgage contract is required, processing and underwriting must comply with FCA Regulation and current policy and procedures, including the type of mortgage available and a full affordability assessment. As discussed previously, it is no longer the Society's policy to offer interest-only mortgages on residential properties and any new mortgage would need to be on a repayment basis."
So whilst I understand what the response mean, my questions are:
1) I presumed they are referring to their own internal "policy and processes" where they justify that, as they no longer market interest-only (IO) mortgages for residential properties, they can deny the porting of an existing IO mortgage?
2) If correct does it make sense that they can, through their current internal policy & processes, deny existing contractual obligations? I would expect the new FCA Regulation to have nothing to say regarding the provision of IO mortgages as many other banks are still doing this.
3) Do you think I have any ground to raise an appeal on this? Timing-wise I will need to proceed with the porting as I risk losing the property but can I reserve the right to appeal once we have complete? The real problem is that with only 8 years remaining for repayment this is a very short period to repay a mortgage.
Much appreciate any advice from knowledgable sages and IFAs out there
I am hoping a member on here can provide some advice re the porting of an existing mortgage.
In short I have a good life-term interest-only tracker mortgage taken out just before the economy went tits up back in 2009 when BE base rate was 5.5% with a very good (ie low) premium over BBR. I am now in the process of upsizing and intend to port the mortgage over to the new property (just about afford it without taking on additional borrowing due to (some) capital growth in the last 12 years). My mortgage company is Hinckley & Rugby and I know they wanted shot of this mortgage ASAP - they have already been making zilch profit out of this mortgage for some years now with the BBR at only 0.5%. There is still another 8 years term to go before the mortgage is due.
The problem when I enquired about the porting of the said mortgage I was told that this is OK (the mortgage term does say that I can move the mortgage to another property if I subsequently move house), but due to the fact that H&R no longer provide interest-only mortgage for residential customers, they have to change it to a repayment mortgage - which isn't exactly what I wanted as there is only an 8 years terms remaining.
I have challenged their decision on the basis that what products they currently market or not should have not bearing on an existing, contractual agreement, which does allow for the porting of an existing mortgage. This is the reply i got from H&R:
"The porting of the mortgage would entail you applying and creating a new mortgage, incorporating the terms prescribed under the FCA's regulations. Although the terms of the product will be ported, it is emphasised that as a new mortgage contract is required, processing and underwriting must comply with FCA Regulation and current policy and procedures, including the type of mortgage available and a full affordability assessment. As discussed previously, it is no longer the Society's policy to offer interest-only mortgages on residential properties and any new mortgage would need to be on a repayment basis."
So whilst I understand what the response mean, my questions are:
1) I presumed they are referring to their own internal "policy and processes" where they justify that, as they no longer market interest-only (IO) mortgages for residential properties, they can deny the porting of an existing IO mortgage?
2) If correct does it make sense that they can, through their current internal policy & processes, deny existing contractual obligations? I would expect the new FCA Regulation to have nothing to say regarding the provision of IO mortgages as many other banks are still doing this.
3) Do you think I have any ground to raise an appeal on this? Timing-wise I will need to proceed with the porting as I risk losing the property but can I reserve the right to appeal once we have complete? The real problem is that with only 8 years remaining for repayment this is a very short period to repay a mortgage.
Much appreciate any advice from knowledgable sages and IFAs out there
