Porting a mortgage is the process of transferring your existing mortgage from one property to another when you move. It allows you to maintain the same terms and conditions of your current mortgage, including the interest rate, remaining term and loan amount. Essentially, it enables you to carry your mortgage with you to a new home, providing convenience and potentially saving you money on early repayment charges.
Are All Mortgages Portable?
Not all mortgages are portable, and the portability feature may vary depending on the lender and the specific mortgage product. While many mortgage types offer portability, it’s essential to check with your lender or review your mortgage agreement to determine if your specific mortgage is portable. Here are some common types of mortgages that may or may not be portable:
Fixed-Rate Mortgages: Fixed-rate mortgages typically have portability options. This means you can transfer the fixed interest rate and other terms to a new property when you move. However, certain restrictions or conditions may apply, such as a time limit or the requirement to meet the lender’s criteria for the new property.
Variable Rate Mortgages: Variable rate mortgages may or may not be portable, depending on the lender.
Tracker Mortgages: Tracker mortgages, which have interest rates that follow a specified index, are often portable. Similar to fixed-rate mortgages, certain conditions or limitations may apply, and it’s important to check with your lender.
Discounted Rate Mortgages: Discounted rate mortgages may or may not be portable, depending on the terms set by the lender.
Buy-to-Let Mortgages: Buy-to-let mortgages typically do not offer portability. These mortgages are designed for properties that are rented out, and the assumption is that the borrower will not be moving into the property themselves.
Am I Eligible To Port?
It’s worth noting that even if a mortgage is technically portable, the lender will still assess your eligibility based on their criteria, including creditworthiness, income and the suitability of the new property. They want to ensure that you can afford the new property and continue to meet your mortgage payments. Lenders may require you to undergo a financial assessment to determine your eligibility for porting.
How Much Does It Cost To Port My Mortgage?
Porting a mortgage usually involves certain fees and costs. These can include an application fee, valuation fee, legal fees and an administration fee. It’s important to factor in these costs when considering whether to port your mortgage.
Mortgage Porting Example:
Say you have a mortgage on an existing property with a remaining balance of £200,000 and an outstanding term of 20 years. You also have a fixed interest rate of 2.5% for the next 3 years. However, you have found a new property that you would like to purchase, and its value is £300,000.
After speaking with your lender, they confirm that your mortgage is portable and agree to transfer the outstanding balance of £200,000 to the new property. As the new property’s value is higher than your current mortgage balance, you’ll need to provide an additional deposit of £100,000 to cover the difference. Your lender may also adjust the terms of your mortgage, such as the interest rate or remaining term, to align with their current offerings.
By porting your mortgage, you will avoid any early repayment charges. This process simplifies the transition to your new property and saves you from the hassle of getting a new mortgage.
Can I Port My Mortgage To A More Expensive Property?
Yes, porting your mortgage to a more expensive property is possible, but there may be limitations. The lender will assess whether you can afford the increased mortgage amount based on your financial circumstances and affordability. If you meet the lender’s criteria, you may be able to port your mortgage to a more expensive property, subject to any lending limits set by the lender.
What Are The Advantages Of Porting A Mortgage?
Porting a mortgage offers several advantages:
- Continuity – Porting allows you to maintain the same mortgage terms and conditions, including the interest rate. This can provide stability and peace of mind during the transition to a new property.
- Avoiding Early Repayment Charges – By porting your mortgage, you can potentially avoid paying early repayment charges that might apply if you were to remortgage or switch to a new lender.
- Retaining a Favourable Interest Rate – If you have a competitive interest rate on your existing mortgage, porting allows you to keep that rate even if market rates have increased since you took out the mortgage.
- Simplified Process – Porting your mortgage can simplify the home-moving process by reducing the paperwork and administrative tasks associated with securing a new mortgage.
What Are The Cons of Porting A Mortgage?
While porting a mortgage offers advantages, it’s important to consider the potential downsides:
- Limited Options – Porting restricts your choice of mortgage lenders and products. You may not have access to the most competitive rates or favourable terms available in the market.
- Property Suitability – If the new property does not meet the lender’s criteria, such as valuation or location restrictions, you may not be able to port your mortgage.
- Additional Borrowing – If you require additional funds when moving to a new property, porting may not allow you to increase your mortgage amount.
- Early Repayment Charges – While porting can help you avoid early repayment charges on your current mortgage, some lenders may apply new charges if you want to make changes to the mortgage terms during the porting process.
Should I Port My Mortgage Or Switch To A New Deal?
There are a number of factors to consider when deciding whether to port your mortgage or switch to a new deal. Ultimately you want a mortgage with the best rates possible.
Take time to compare the interest rate on your current mortgage with the rates available for new deals. If the difference is significant, it may be worth exploring elsewhere to get the best mortgage deals. There are also other costs involved in porting your mortgage to consider, including any fees, against the potential savings or benefits of switching to a new deal.
Assess whether you need additional features or flexibility in a new mortgage that your current mortgage does not offer. For example, if you require the ability to make overpayments or want a different repayment term.
Conclusion
Ultimately, whether to port your mortgage or switch to a new deal will depend on your individual circumstances, financial goals and the options available to you. Porting a mortgage can be a convenient option for homeowners who are looking to move to a new property without incurring penalties or losing favourable mortgage terms. However, it’s important to understand the specific terms and conditions of your mortgage agreement and consult with your lender or mortgage advisor to determine if your mortgage is portable and if it aligns with your current and future needs.
