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How To Port Your Mortgage?

Property Saviour » Mortgages » How To Port Your Mortgage?

Mortgages can be perplexing. Even if you have a great rate, you might hesitate to change it. So, what if you’re moving house?

One option is to port your mortgage. We’ll explain what this means and how it works so you can decide if this is the right option for you.

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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.

How to port your mortgage
If you want to port your mortgage, you'll need to re-apply for the mortgage you already have.

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.

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
You should also be aware that you may not be able to keep the same interest rate you had before. When porting a mortgage, the rate usually comes with you.

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.

Porting a mortgage to a more expensive property

When porting your mortgage to a more expensive property, you’ll likely have to borrow more money to cover the remaining amount. However, you’ll have to go through your current lender’s affordability checks again, and there’s a chance that you won’t be approved.

You should also be aware that you may not be able to keep the same interest rate you had before. When porting a mortgage, the rate usually comes with you.

But if you’re borrowing more, the lender may not be willing to do this at the same rate. You may have to borrow the money at a higher rate.

Porting a mortgage to a cheaper property

A portable mortgage can be advantageous when you’re downsizing.  Another obvious advantage is that you may release equity, and your newer monthly payments will be lower.

The affordability checks from your lender will still have to be done, even if the house is less expensive.  Fees such as a valuation fee for the new property will have to be paid.

What is a mortgage prisoner
To overpay without incurring a penalty, check with your lender for the amount. To increase your equity, you can overpay.

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.

Is it easy to port your mortgage
Porting can be a simpler alternative as you won't have to spend as much time researching and comparing rates, product offers, and new lenders.

Is it easy to port your mortgage?

Porting can be a simpler alternative as you won’t have to spend as much time researching and comparing rates, product offers, and new lenders.

As your current lender already has much of your data, you’ll also not have to complete a lot of paperwork.

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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