Porting a Mortgage
Moving to a new home presents the dilemma of whether to transfer your current mortgage or choose a new one. However, this decision might not always be within your control, and so you’ll need to make some considerations.
This guide walks you through the process of porting a mortgage, assessing your eligibility, and determining if it aligns with your financial goals. We’ll cover:
What does it mean to port a mortgage?
Mortgage porting involves transferring your current mortgage deal or interest rate to a new home purchase. Essentially, you 'port' your existing mortgage terms from your current property to your new one.
How does porting a mortgage work?
It's important to understand that what is 'portable' is the deal or interest rate, not the loan itself. Therefore, you'll need to undergo a new application process. This means that any changes in your circumstances could impact your eligibility for the deal, including factors such as the loan-to-value ratio (LTV) of your new property, lender criteria, as well as your financial situation and household income.
When porting a mortgage deal, you follow virtually the same procedure as when switching to a new deal. Specifically, you're requesting your lender to reissue the loan to facilitate the purchase of your new property. Since it's improbable for your new home to have the exact same value as your current one, adjustments will likely be necessary. For instance, you may find yourself needing to borrow additional funds or possibly reducing the mortgage amount to align with your new property's cost.
What are the benefits of porting a mortgage?
Choosing to port your mortgage deal entails sticking with your current lender, which can prove to be a prudent financial decision. This avenue becomes particularly beneficial if you find yourself in the midst of a mortgage deal that incurs exit fees or early repayment charges, as porting allows you to potentially avoid or even recoup these expenses upon relocation. Moreover, if your existing mortgage rate is lower than any of the current offerings from your lender, porting could lead to substantial savings.
Porting your mortgage also offers a streamlined process, sparing you the extensive research and comparison typically associated with exploring new rates, product deals, and lenders. Relatedly, since your current lender already possesses a significant portion of your financial information, the paperwork involved is likely to be considerably less burdensome.
What are the disadvantages of porting a mortgage?
While opting to stay with your existing lender and rates/terms through mortgage porting can offer convenience, there's a risk of missing out on potentially more favourable terms or rates available elsewhere. If superior deals are accessible from other lenders, exploring remortgaging options might be more advantageous than porting. Furthermore, even with porting, you'll still encounter various additional fees, such as valuation fees, arrangement fees, and legal fees.
Moreover, if the property you intend to purchase surpasses the value of your current one, any extra funds required are likely to incur a different rate. This could result in managing two mortgages or products with disparate rates and end dates, which can complicate matters if you're thinking of switching to a different lender for remortgaging.
Can I port my mortgage?
There are several aspects which affect your ability to port a mortgage:
Credit Score
Lenders assess borrowers with adverse credit as higher risks. If your credit score has declined or you've had recent credit issues, your lender may require a larger deposit or reject the porting request.
However, if you're downsizing or moving to a property of equal value without the need for additional borrowing, the lender may consider porting despite credit concerns, as the existing debt remains unchanged.
To get an idea of your financial suitability before applying, you can use our free credit check tool (£14.99 per month after the free 30-day trial). Using it will help you spot possible mistakes and fraudulent activity so that you can address any problems. The trial and subscription can be cancelled at any time.
Property Price
Porting to a cheaper property is often straightforward as it doesn't involve borrowing more money. However, stricter mortgage application processes since your original mortgage might still apply. If the property value decreases while the loan amount stays the same, the lender may block the porting due to increased risk from a higher LTV ratio.
If the new property is more expensive, you'll likely need further borrowing unless you can cover the difference with cash. Additional borrowing usually involves a new mortgage product based on prevailing rates. Providing extra capital strengthens your position, lowers the LTV ratio, and reduces the risk to the lender, increasing the chances of approval.
Property Type
Unusual properties may pose challenges in selling, making lenders cautious due to higher perceived risks. Some lenders might request a larger deposit to mitigate these risks, but porting is still feasible.
Employment Status
For employed individuals, lenders take into account factors such as salary, job tenure, and bonuses. Recent job changes may raise concerns, with lenders generally preferring stable employment history of at least twelve months.
If you’re self-employed, lenders typically require two or three years of full accounts to demonstrate consistent income. Those who are newly self-employed, unemployed, on long-term sick leave, or about to change jobs might face hurdles in approval, though not necessarily impossibility.
How long does it take to port a mortgage?
Upon approval from your lender for a mortgage port, the process of transferring your mortgage to your new property typically spans anywhere from 30 days to three months.
What if my lender refuses to port my mortgage?
If your current mortgage agreement doesn't permit porting, your next step involves exploring options for obtaining a new mortgage, either through your existing lender or by seeking out a different one. Notably, if you're currently under a fixed deal, terminating it prematurely usually incurs an early repayment charge.
Before making any decisions, it's crucial to consult with your current lender to ascertain the exact amount of early repayment charges applicable to your situation given that these charges can often amount to as much as 5% of your outstanding mortgage balance.
How to port your mortgage
Your initial move should involve seeking out a seasoned mortgage broker, particularly one well-versed in facilitating mortgage porting. This step not only saves you valuable time but also enhances your prospects of securing approval under the most favourable terms available.
At The Mortgage Genie, we specialise in navigating the intricacies of mortgage porting, even for individuals with bad credit ratings. With our expertise, we can guide you through each stage of the process. This includes assessing the portability of your mortgage, identifying any potential early repayment charges, conducting a thorough evaluation tailored to your specific circumstances, and ultimately matching you with the most suitable lender offering the best deal.
Don't hesitate to reach out to us today at 01915809890 if you’re interested in porting your mortgage. And why not see how much you could borrow up to right now by using our mortgage calculator?
This information is a guide only and should not be relied on as a recommendation or advice that any particular mortgage is suitable for you. All mortgages are subject to the applicant(s) meeting the eligibility criteria of the specific lender. You should make an appointment to receive mortgage advice which will based on your needs and circumstances.
