What Does Porting a Mortgage Mean?
If you plan to move home and your mortgage is not yet paid off, you must consider whether to take your current mortgage with you or switch to a new lender. This choice may not always be in your hands, however, as some mortgages do not allow you to take them with you. A mortgage that can be transferred to a new property is a ‘portable mortgage’, and porting a mortgage is common practice. However, you must check the terms of your mortgage to ensure whether it is actually portable.
How does porting a mortgage work?
It’s important to note that even if a mortgage is portable in theory, your lender reserves the right to not agree to do so. Mortgage porting is a flexible feature but it is not guaranteed. The lender will assess whether your current mortgage is suitable for the new property you are buying – essentially, you are reapplying for your original deal. If your circumstances have changed since you first took out that mortgage, you may no longer meet the criteria.
It might also fall through if:
– The lender’s criteria has changed
– You haven’t made all your repayments on time thus far
– You also need to consider whether the property you are moving to is more expensive. You may not qualify for a larger loan if you were already close to your maximum with the existing deal, and if you do borrow more, the additional capital may end up coming in a separate, second mortgage product. This means extra fees and possibly a higher interest rate.
There are many things to consider when porting a mortgage, and not all the concerns listed above may apply to you. It is best to do some checks and assess your circumstances before you commit to moving home. This way, you can ascertain whether you should try to port your mortgage, apply for an entirely new deal or perhaps wait until a more suitable time.
What are my options if porting my mortgage is not possible?
You could leave your current mortgage, but you need to check a few things first to ensure you know all of the costs to do this. In brief, these are as follows:
– Early repayment charges (ERC)
– Exit fees
– Fees relating to a new mortgage
If you have assessed your circumstances and decided porting is not the best move, even though you could do it in theory, you should consider your next move. It may be helpful to seek mortgage advice before you proceed.
We can happily look into your options for porting a mortgage and discuss your next steps with you. If you need our help with this, please feel free to book a free call straight into my diary so we can chat more.
I’m ready to move forward – what happens next?
Whether you are porting your mortgage or applying for a different deal, you will need to go through a new mortgage application process. You will be subject to the same tests on your affordability and credit history, so you need to ensure these are in a favourable condition.
Mindful Mortgages can help you find the most suitable lender based on your circumstances. You can book a call with us here or if you’d prefer, drop us a message and we will get back to you as soon as possible.