Updated: 17/09/2024
What Does ‘Porting a Mortgage’ Mean?
If you are moving home soon or considering doing so, Porting your existing mortgage deal could well save you thousands of pounds in fees and interest charges. Porting a Mortgage typically involves transferring the rate and terms of your current mortgage to a new property without incurring any early repayment fees.
However, not all lenders will permit Porting a Mortgage to a new home. Whether this option is available will obviously depend on your lender’s criteria, policies, and lending rules.
We will try and cover what you need to know regarding this product, but it might also be helpful to read our article on ‘Results on an Overview of UK Mortgages 2023‘.
1. What is Porting a Mortgage?
Porting a Mortgage is when you transfer the rate and terms of your current deal to your new property when moving. This can save fees if your current deal has a variable rate or includes early repayment charges. If you are presently considering Porting your Mortgage, make sure that you carefully weigh the advantages and drawbacks. Consulting a Mortgage Advisor is certainly recommended; as they can go through all your options and help determine the best solution for you.
2. How Porting a Mortgage Works
Lenders will conduct due diligence and affordability checks and reassess your income, assets, and debts to determine if you can afford the payments on a new home. It may well be, that you may not be eligible to Port a Mortgage if your income is declining or if you have too many outstanding credits. Furthermore, lenders usually require that you meet their lending criteria, which could mean that the full amount of your mortgage cannot be taken with you when moving.
If you’re thinking about Porting a Mortgage, as mentioned previously, consulting with a Mortgage Advisor is highly recommended. They can explain all your options and find the ideal solution for you.
3. Can I Port a Mortgage to a Cheaper Property?
Porting a Mortgage is the process of moving your existing loan deal to another property while keeping the same interest rate and loan amount. Doing this means you avoid fees associated with breaking your current mortgage and could save thousands in interest costs. Not all mortgages are portable, so as mentioned previously, be sure to review your lender’s terms and conditions to see if porting is possible for you. If so, then porting should be a smooth transition without any issues.
If you can’t Port a Mortgage, you might want to look into switching to a cheaper deal that matches what you currently have. This is usually the best option if you want to reduce interest payments and prevent any early repayment charges (ERCs) associated with breaking an existing mortgage deal.
Alternatively, if you have equity in your existing home, this can be used to help finance a new property purchase. However, it won’t necessarily cover all costs associated with moving; unless you can access more money through a second mortgage, then the remaining balance must come from savings or other sources.
4. Mortgage Porting Example
Lenders typically only allow mortgage porting if the new property is cheaper than your current one, as this necessitates them to reassess your income and affordability again due to potential changes in lending policies since you initially took out the loan.
Alternatively, you might be able to port your mortgage to a more expensive property, though this again will depend on the lender’s lending criteria and you could face paying an increased interest rate for additional borrowing. Furthermore, there may be an exit or transfer fee involved as well.
Are you in a position to Port a Mortgage? If you are not sure, please contact us HERE and we will endeavour to help you.