Porting a mortgage occurs when you move house and wish to transfer your mortgage to the new property. This is known as “porting”. If you have substantial early repayment charges on your current mortgage it can makes sense to port your loan and avoid paying the penalties.
However, although many mortgages still have this flexible feature there are no guarantees that a lender will automatically allow you to port your mortgage.
So how does porting a mortgage work?
First things first you have to reapply with your lender to “port” your mortgage. This means a new application, evidence of earnings, affordability calculations. The application will be treated as if you are new borrowers and the same checks and provisions apply.
You may struggle if circumstances have changed, eg, you’re now self-employed, you earn less or you have more debt and/or outgoings. Your lender may also have changed their lending criteria and you no longer fit their assessment, or if you have any missed mortgage payments this may make you a less attractive proposition and your current provider will not lend to you.
What if you want to borrow more?
This is possible but again depends on your individual circumstances and the maximum your lender will allow you to borrow. You will also only “port” across the portion of your mortgage on your current rate, for example if you have an outstanding mortgage of £200,000 on your fixed rate this is the amount that is ported to your new property. Any additional borrowing needs to be taken on a current rate available from the lender and you could end up on two mortgage products with rates ending on different dates.
Do the maths
One advantage of using an independent mortgage adviser like Choice is that we will do the calculations to see if you are better to stay with your existing lender and port your mortgage or if you would actually be better off paying the early redemption penalty and moving to a lender on a cheaper interest rate.
I’m thinking about moving, what should I do?
Before you commit to selling your property and buying a new one, you should take independent financial advice to see if you are likely to qualify to port your existing deal or get a new mortgage and what would be the most cost effective option for you.
If it all looks possible to port your mortgage then you can start the ball rolling and get your existing property on the market and start looking for your new home.
If you are thinking about moving and would like to see if you could port your mortgage please get in touch.