Do you want to move home but are put off by early redemption charges? Perhaps you’re fixed into a low rate mortgage and don’t want to risk your monthly repayments going up?
These are both valid concerns when deciding whether to sell or stay put – particularly in the current climate where (at the time of writing) interest rates have risen 14 times and are still anticipated to increase further.
On rare occasions the choice to sell may not be your choice at all but forced upon you by circumstance. Perhaps your company is relocating and you need to move to keep your job. Or maybe an illness forces you to give up work and you suddenly find yourself earning less.
At times such as these you may feel that your only option is to take a hit on your lender’s early redemption charges and apply for a new mortgage at today’s rates. However, there is another, potentially more attractive, option available to you and that’s porting your existing mortgage to a new property.
Porting a Mortgage Explained – What Does it Mean to Port a Mortgage?
Porting a mortgage means that you transfer your current mortgage product from the property you are selling to the property you are buying.
It means that instead of having to exit your mortgage early and take out a new mortgage at a revised rate you can transfer the existing rate you’re already on to the new property.
What Does Porting a Mortgage Involve?
Although choosing to port your mortgage means you’ll be retaining your existing interest rate, you may still need to pass an eligibility check in order to satisfy the lender that you meet the affordability criteria for the loan.
As part of the porting process the lender may also carry out a valuation on your new home to ensure that it is a solid investment to secure your loan against.
What Happens if The New Property is Less or More Than my Current Home?
This is very common when porting a mortgage. After all, it’s highly unlikely that the new home you’re buying will be the exact same price as the home you’re selling.
If your new home costs more and you need to borrow more money, you will need to take out a second loan to make up the difference. This loan must be with the same lender as your ported mortgage and you must select a product from their current range, which means the rate may be higher than your ported mortgage rate.
If your new home costs less, you will usually have to pay an early repayment charge on the portion of the loan that you are repaying.
What Are The Pros And Cons of Porting a Mortgage?
Porting your mortgage can allow you to move home while you’re still within a fixed rate interest period and keep your existing rate, even when you move to the new property. In some cases it can also save you from having to pay early repayment charges.
On the flipside, porting a mortgage means that you’ll need to reapply for the loan and may not be accepted for it. You may also have to pay early repayment charges to your lender if you need to pay back any part of the loan early.
Porting FAQs
Is it better to port a mortgage?
It can be better to port a mortgage if interest rates have increased since you took out your loan and you would incur early repayment charges by exiting your mortgage early.
What does it mean to port a mortgage?
Porting a mortgage means you’re transferring your mortgage product to a new property.
How long do you have to port a mortgage?
This depends on your lender and whether your sale and purchase complete on the same day. If you sell your property before you complete on your new one you usually have between 30-90 days to port the mortgage.
Is it easier to port a mortgage?
Porting a mortgage is no easier than applying for a new mortgage. You will need to undergo affordability checks with your lender to ensure you can afford the repayments.
Do you pay stamp duty when porting a mortgage?
Yes. You are still liable for stamp duty on your new home when porting a mortgage.
Do you get credit checked when porting a mortgage?
Yes. A lender will usually run a credit check as part of their affordability checks when porting a mortgage.
How do I port my mortgage?
Speak to us and we can arrange your porting mortgage application with your current lender.
When is it not a good idea to port my mortgage?
It may not make financial sense to port your mortgage if interest rates have lowered since you took out your existing mortgage and you would be liable to pay an early repayment charge on your existing loan.
Do all lenders allow you to port a mortgage?
Most lenders will allow you to port a mortgage, subject to their porting criteria.
Considering Porting Your Mortgage?
For expert advice about porting your mortgage don’t hesitate to engage our experienced team for a no-obligation chat. You can request a callback via our online appointment form.
Your home or property may be repossessed if you do not keep up repayments on your mortgage
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