My partner and I separated 18 months ago and we are now selling our property. To save on the large early repayment charge, I looked at porting the mortgage to a new property.
Santander has sent me an offer and everything looks great. The only thing is my ex partner is now not agreeing to me porting it.
Can he stop me from doing this? It is on a low fixed rate so I am keen to utilise this and escape the £12,000 early repayment charge. J.G
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David Hollingworth replies: The breakdown of a relationship brings lots of difficult issues to deal with and financial matters will be a big part of that, as both sides look to the future.
The home and any associated mortgage will be a key issue and one that will only be more complex when there’s a family involved.
Ultimately, to allow both parties to go their separate ways, it’s likely to either require one party to buy out the other, or for the property to be sold.
That will allow the release of the equity in the property, which can then be split according to any agreement between the two sides.
Porting can avoid costly early repayment charges
Selling the property will result in the mortgage either being paid off, or taken to a new property.
The amount required to pay off the mortgage will depend on the terms of the deal itself and any applicable early repayment charge will have a particularly big bearing on the cost, as you’ve identified.
As one or both of you is moving to a new property then it could be possible to avoid the cost of the ERC.
This is referred to as porting the mortgage, and allows the existing terms to be effectively transferred across to the new home.
Who gets the mortgage?
There’s now an added incentive to avoid coughing up an ERC, as the cost of borrowing has increased rapidly due to soaring interest rates.
Porting the mortgage to a new property could preserve a much lower rate than could be secured in the current market as well as avoiding the ERC.
That has led to some couples negotiating over who gets to keep the mortgage, when the current fixed rate was taken at a low point and could still have a number of years left to run.
Not all lenders can enable a mortgage to be split and ported by each of the two separating borrowers, but a number can.
Santander is one of the lenders that can split the mortgage, so it could be possible for you both to port it to two separate properties.
If that is the bone of contention and he also wants to take advantage of the current mortgage rate, it may be worth discussing how to go about splitting the mortgage.
If the purchase of a new property will not be simultaneous, then half the mortgage would need to be redeemed which would incur a proportion of the penalty.
However, lenders will often refund that ERC if a new purchase is completed within a certain timeframe. In Santander’s case that is within three months of redeeming.
Can you afford the home on your own?
What isn’t clear is why your ex-partner isn’t happy for the mortgage to be ported to a new property.
It would reduce the cost of redeeming the mortgage for both of you, and assuming that the equity is to be split equally, that would save each of you £6,000 through avoiding the payment of the ERC.
However, porting the mortgage to the new property will need the lender to be able to see that it will remain affordable.
If you will take the mortgage on in your own right, you will need to demonstrate that there’s enough income to meet the lender’s affordability criteria.
However, if you’re proposing that your partner remains on the mortgage to include their income for affordability purposes, it will have consequences and may be the reason for their resistance.
Remaining on the mortgage would leave him jointly liable for the mortgage payments and would affect the amount that he will be able to borrow himself if he goes on to buy a new property in future.
If that hasn’t already been agreed then it could be the reason for his refusing to allow the port in its current format. If he needs to stay on the mortgage for you to afford the new property, then he would be in a position to prevent you proceeding with the porting.
If you are taking the mortgage on in your own right it sounds like it would be in both your interests to avoid paying the charge.
You should talk to your lender about the ability to proceed to port on your own. There may be no formal requirement for your partner’s consent, but the lender may be cautious about proceeding if your partner has raised an objection.
Finally, if solicitors were involved in the separation then consult them on the agreement. If there was a court order put in place, this could in theory stipulate that the mortgage be ported.
Get your mortgage question answered
David Hollingworth is This is Money’s mortgage expert and a broker at L&C Mortgages – one of Britain’s leading specialists.
He is ready to answer your home loan questions, whether you are buying your first home, trying to remortgage amid the rates chaos or looking to plan further ahead.
If you would like to ask him a question about mortgages, email: firstname.lastname@example.org with the subject line: Mortgage help
Please include as many details as possible in your question in order for him to respond in-depth.
David will do his best to reply to your message in a forthcoming column, but he won’t be able to answer everyone or correspond privately with readers. Nothing in his replies constitutes regulated financial advice. Published questions are sometimes edited for brevity or other reasons.