If you have a portable mortgage you may be able to transfer it to a new property when moving home. Find out if porting your existing mortgage is the right option for you.
What does ‘porting a mortgage’ mean?
Porting a mortgage is the process of taking your existing mortgage deal on your current property and transferring it to your new home. Most (although not all) mortgages are portable, but even if yours is, it is worth looking into whether it is the right option for you. In theory, porting a mortgage sounds easy, but in reality, it can be tricky (especially if you’re moving to a more expensive property) and can end up costing you more than remortgaging to a new deal.
How does porting a mortgage work?
When you port a mortgage, you have to reapply for the deal. Your provider will use its current lending criteria to decide whether to let you port. Bear in mind that this may be different from the criteria it used originally. Also, if your circumstances have changed, you might not qualify.
Porting a mortgage to a more expensive property
If you want to buy a more expensive property and need to borrow more money, porting a mortgage can be difficult and costly. You will need to pass your lender’s affordability checks and you may have to pay a fee to increase your loan or take on another mortgage product at a different rate. You will usually have to pay a valuation fee so your lender can check that the new property is worth roughly what you’re planning to pay for it. There could also be an arrangement fee if you have to take out an additional product. Before asking to port your mortgage, look at the interest rates currently available for your situation to see whether you’re on the best deal you could be. If you are not, it may be worth considering exiting your current mortgage and applying for a new one. You will need to take all the fees into account – including exit fees for your current mortgage as well as arrangement and valuation fees for the new one – in order to work out what the cheapest option is.
Porting a mortgage to a cheaper property
If you do not need to borrow any more money for your new home – for example, if you’re downsizing or buying in a cheaper area – then porting your mortgage could be an attractive option. Your mortgage lender will run an affordability check based on current lending criteria, so bear this in mind in the months running up to your move and try to maintain (or build) a good credit rating. Unfortunately, even if you decide to keep your existing mortgage for your new house, you may still have to pay certain fees such as a valuation survey fee.
Porting a mortgage vs remortgaging to a new deal
Even if you have a portable mortgage and do not need to borrow any extra cash, it’s worth checking whether you’re still on the best mortgage deal for your circumstances. Mortgage rates have been very low for a while now, so it is worth taking the time to shop around. This is particularly relevant if you are now paying the lender’s standard variable rate, which will usually be much higher than an introductory rate on a new deal. Besides, you will usually have built up more equity in your home since taking out your current mortgage, meaning you may be able to access even better rates (you can check what loan-to-value ratio you’ll need to borrow at using our LTV calculator). Make sure you take fees as well as interest rates into account before deciding what to do, as a deal with a better rate could still work out more expensive when you factor in exit fees for your current mortgage and arrangement fees for the new one. If you are unsure what to do, it’s worth talking to an independent mortgage broker for expert advice.
What if your mortgage is not portable?
If your mortgage isn’t portable, your only option will be to pay any early repayment charges (ERCs) on your current deal and switch to a new one – or, if the ERC is prohibitively high, stay put in your current property until your fixed term ends. ERCs are usually charged as a percentage of the overall loan, which reduces over time. For example, if you have a five-year fix, the ERC might be 5% of your mortgage balance in year one, 4% in year two, 3% in year three, and so on. These fees can add up to tens of thousands of pounds, so it is vital to think about when you will next move home before locking yourself into a long-term mortgage deal – even if it is ‘portable’. If you are unsure about your future plans, you may be best off choosing a shorter-term fix, as these deals tend to come with much lower penalties for early repayment.
You can usually take your mortgage with you when you move. But new mortgage deals are constantly being released so whilst your existing mortgage might have been the best deal at the time, you’ve got nothing to lose by checking whether better deals are available before you commit to porting your mortgage.
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