Moving house is often an exciting milestone, but it can also bring financial decisions that require careful planning. One such decision is whether to port your mortgage—a process that allows you to transfer your current mortgage deal to your new property while retaining the same terms and interest rate.
Porting can be a smart move, especially if you’re locked into a favourable fixed rate or want to avoid early repayment charges. Whether you’re upsizing, downsizing, or simply relocating, understanding how porting works could save you money and simplify the transition to your next home.
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What does ‘porting a mortgage’ mean?
Porting a mortgage means you can transfer your existing mortgage agreement to a new property. You will take out a new loan with your current lender, but the terms and conditions will remain the same. You will simply be starting afresh with a new home.
How does porting a mortgage work?
If you want to port your mortgage, you’ll need to re-apply for the mortgage you already have. Your lender will assess your affordability by looking at your income, outgoings, debt and credit history.
If you don’t meet their criteria, they may refuse to port your mortgage, even if you are still making your monthly payments. If that happens, you must decide whether you want to re-mortgage to a new deal or wait out your current mortgage.
If your lender does allow you to port your mortgage, you may have to pay for a new property valuation.
Why would you port your mortgage?
You may choose to port your mortgage if it has an attractive rate and you’d like to keep it. Porting your mortgage can also be beneficial if you’re subject to an Early Repayment Charge (ERC).
This is because re-mortgaging requires paying off your existing mortgage and taking out a new one, leading to an ERC.
These charges can amount to thousands of pounds, so porting your existing mortgage could save you money. The lender is not obligated to port your mortgage, and in some cases, re-mortgaging might be the better option.
Can I port my mortgage to a cheaper property?
Yes, you can port your mortgage to a cheaper property, but it’s not always as simple as it sounds. Porting means transferring your current mortgage deal to your new home, keeping the same interest rate and terms. If the new property costs less than your existing one, you’ll need to pay off the difference between your current loan and the smaller amount needed for the cheaper property. For example, if your current mortgage is £200,000 and your new home only requires a loan of £150,000, you’ll need to repay £50,000.
Most lenders let you repay a portion of your mortgage without fees—usually up to 10% of the balance each year—but if you go over that limit, you might face early repayment charges (ERCs). Lenders will also reassess your finances during the porting process, checking things like your income, credit score, and affordability. If the cheaper property changes your loan-to-value (LTV) ratio (the percentage of the property’s value covered by the loan), it could affect whether the lender approves the transfer.
For instance, if you’re moving from a £300,000 home with a £200,000 mortgage to a £200,000 home needing only £150,000 in borrowing, porting might save you from paying ERCs on your current deal. But make sure to factor in costs like valuation fees and check that your financial situation meets the lender’s requirements before committing!
What happens to your mortgage when you move?
When you move house, what happens to your mortgage depends on whether you decide to transfer (port) it to your new property or settle it and take out a new one. Here’s a breakdown of the options:
- Porting Your Mortgage: If your mortgage is portable, you can transfer it to your new home while keeping the same interest rate and terms. This is often beneficial if you’re locked into a favorable rate or want to avoid early repayment charges (ERCs). For example, if you have a £200,000 mortgage on a 2% fixed rate and are moving to a home of similar value, porting allows you to retain those terms. However, your lender will reassess your finances and the new property’s value to ensure eligibility. If you’re upsizing, you may need additional borrowing at a potentially higher rate.
- Paying Off and Starting Fresh: If porting isn’t an option or doesn’t suit your situation (e.g., the new property is unconventional or your financial circumstances have changed), you’ll need to pay off your current mortgage using proceeds from the sale of your old home. You can then apply for a new mortgage for the next property. This might be advantageous if better deals are available but could involve fees such as ERCs, exit fees, and new arrangement costs.
For example, if you sell a home worth £300,000 with £200,000 left on the mortgage, the sale proceeds will first pay off that balance. If you’re buying a £400,000 home, you’ll need to arrange a new loan for the remaining amount after your deposit.
Ultimately, whether you port or start fresh depends on factors like your current mortgage terms, the value of the new property, and your financial situation. Always consult with your lender or broker to explore the most cost-effective option for your move.
Are all mortgages portable?
Most mortgages can be transferred, but it’s always best to check with your lender first.
If you decide to port your mortgage, you must reapply for a loan and go through the lender’s affordability assessments once more.
Your current lender may deny your application, even if you have a mortgage with them already.
This could be due to a change in your circumstances or because the lender has tightened their borrowing criteria.
Are there circumstances where I wouldn’t be able to port my mortgage?
You may not be able to port your mortgage if your financial situation has changed. This could include:
- A decrease in your income;
- Missing multiple payments in the past;
- Looking to move to a more expensive property.
Are there fees involved in porting a mortgage?
If you’re approved to port your mortgage, there are a few fees you may need to pay. The first is an arrangement fee, a charge made by the lender to set up your mortgage.
The second is a valuation fee, which is the amount paid to a surveyor to assess the value of the property you’re moving to. This is done to ensure the house you’re buying is a good investment for the lender.
What is a mortgage prisoner?
If you’re unable to change your mortgage, you may be a “mortgage prisoner.” This means the lender has denied you due to affordability tests, or few lenders are willing to accept you. You may not have any choice but to stay with your current mortgage.
However, there are some ways to free yourself from “mortgage prison.” You can overpay your mortgage, increase your equity by doing the same, reduce your debts and outgoings, or downsize to a smaller home.
To overpay without incurring a penalty, check with your lender for the amount. To increase your equity, you can overpay.
Reducing your debts and outgoings will make the lender more confident that you can make the required payments. Downsizing to a smaller home or a cheaper area can help you avoid needing extra borrowing.
What’s the difference between porting a mortgage and remortgaging?
Porting a mortgage means you can take your existing deal with you when you move. It’s a similar process to re-mortgage, but your current lender lets you transfer the mortgage to a new property.
When it comes to re-mortgaging, you’re taking out a new mortgage on a different property. You could also re-mortgage the same property for other reasons, like repairs or extensive renovations.
You’re likely to get better interest rates when re-mortgaging since you have more equity in your current mortgage. You could also get some good introductory rates.
However, even if you get a great interest rate, the deal could end up being more expensive overall. You’ll need to pay exit fees from your existing mortgage and arrangement fees for the new one.
If you’re unsure, it’s worth speaking to a mortgage broker to see what deals are available.
Can I port my mortgage within 6 months?
Before porting your mortgage, there are some important things to consider. Your new mortgage must be finalised for at least six months before submitting the porting application.
If the new property purchase is not completed on the same day the current mortgage is redeemed, an Early Repayment Charge (ERC) will be applied.
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