There’s a whole host of reasons why people move home and buy a new house – from upsizing or downsizing to lifestyle changes such as marriage, divorce or retirement.
Maybe there’s a new job offer and you need to move to a new city or maybe you just want to live in a better area or neighbourhood or want to be closer to family or friends.
But did you know you don’t always need a new mortgage to move to a new house?
Many mortgages are actually portable – meaning that you can take them with you when you move home.
‘Mortgage porting’ is the process of transferring your existing mortgage deal to a new property when you move house. But it might not be for everyone – or even allowed.
One of the main advantages of porting your mortgage is that it would allow you to keep the same interest rate and terms – something that could be a massive boon if you’re on a really good mortgage deal already.
If you have a low-interest rate or favourable terms, porting can help you keep those benefits without moving to a more expensive mortgage.
If you have a fixed-rate or tracker mortgage with favourable terms and decide to move, porting allows you to keep your current interest rate, mortgage conditions and any early repayment penalties attached to that deal.
And it’s those latter Early Repayment Charges (ERCs) that porting can help you avoid. Most mortgages come with ERCs if you pay off your loan early, which can be a significant cost. Porting allows you to avoid these charges by continuing the mortgage on a new property.
Porting might also be easier than applying for a completely new mortgage.
However, there can be downsides too.
Lenders will often want to perform new affordability checks, which means you need to qualify for the loan again. This could be especially important if your financial situation has changed as you may not pass these checks, making porting difficult.
Even though you’re porting, there can still be associated fees, such as legal fees or valuation fees, which all add up.
And not all mortgages are fully portable. If you are moving to a more expensive home, you may need to take out additional borrowing, which could be at a different (possibly higher) interest rate.
Then there’s time considerations to factor in too. Porting can take time and may not fit the timeline of your property purchase. If you need to act quickly, porting may not be the best option.
The mortgage market might have also changed since you took out your original loan, meaning new products could be more favourable than the one you’re currently on.
There might well be better and more flexible options available. And if you can find a new deal that offers better terms or lower rates, it might make sense to consider switching even if it involves paying an ERC.
Also keep in mind that if your financial circumstances have changed (maybe you’ve seen a reduction in income or a change in employment) you might not be able to port the mortgage and would need to explore other options.
Porting can be good idea if you want to keep your existing mortgage deal but it depends on your lender’s policies and your financial situation.
However, it’s important to compare this with the current mortgage deals available and consider the costs, your financial situation and the terms of the new property purchase.
Remember, smart choices start with expert advice – speak to your mortgage adviser to get the best for your financial future.
How porting works
Eligibility: You usually need to apply for porting and meet the lender’s criteria again, as if applying for a new mortgage. The lender will reassess your financial situation and the new property’s value.
Porting Process: When selling your old property and buying a new one, the amount borrowed and the interest rate can be transferred. If you need a larger mortgage for the new home, the extra borrowing might be on different terms and rates.
Costs: While porting may save you from paying early repayment charges, there could still be fees for arranging the new mortgage or valuation fees for the new property.
Conditions: Not all mortgages are portable. Additionally, if your circumstances (like income or credit score) have changed, you might not be eligible for porting, even if your mortgage allows it.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Your initial mortgage appointment is without obligation. We normally charge a fee for our services; however, it is payable only on the submission of your mortgage application. The fee will depend on your circumstances but our standard fee is £549. Complex cases usually attract a higher fee. We will discuss and agree the fee with you prior to submitting any mortgage application.
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