Can I port my mortgage?
If you’re already a homeowner but intend to move to a new home, you can often take your existing mortgage with you. This is called ‘porting’ your mortgage, and can be more cost-effective than taking out a new mortgage.
When you come to buy your next home, you can of course take out a whole new mortgage. The new mortgage pays off your old mortgage and you move onto a whole new deal. However, there can be extra costs involved with doing this, which is why some people choose to keep their current mortgage and transfer it to the new property. Here’s a quick introduction to how this works.
What are the possible drawbacks of a new mortgage?
The terms of your current mortgage deal may not fit in with your plans to move. For example, if you want to move soon but your deal has some time left to run, you may face early repayment fees (also known as redemption penalties) if you pay it off before a certain date. You can also avoid paying an exit fee (usually a few hundred pounds) and an arrangement fee for a new mortgage.
Equally, the terms of your current mortgage deal may be attractive and hard to replicate elsewhere, making it cheaper for you if you can keep it.
Depending on your current mortgage circumstances, the total savings from porting a mortgage can potentially run into thousands of pound.
How do I port my mortgage?
The first step is to ask your lender if you can transfer your mortgage to the new property. Some mortgage deals don’t permit this (so it’s a good idea when taking out a mortgage to ask your mortgage broker to select a portable mortgage just in case).
You will then have to reapply for your current mortgage in order to port it, due to strict lending rules. If your circumstances have changed and made you a higher-risk borrower, this may prevent you from transferring the mortgage to the new property (though you will still be allowed to keep it on your current home if you stay there).
Can I borrow more money when porting a mortgage?
Many home moves involve buying a more expensive property. If you can’t make up the difference in cash, you may need to borrow more money. Your existing lender may or may not allow you to do this – if it doesn’t, you may have no option but to seek a new mortgage with another lender (a mortgage broker can help you do this).
However, your lender may allow you to take out an additional mortgage with them (sometimes called a ‘top-up’ mortgage) to cover the extra amount. This top-up mortgage must be with the same provider, which will limit your options, so you may find it is on less favourable terms. The deal will also have a different end date, making it important for you to keep track of both your mortgages. You’ll also have to pass an affordability check on the new loan.
What if I’m downsizing?
Even if you’re moving to a less expensive property, there may still be a few issues to deal with. Your lender will still have to check that the new property fits the terms of your current deal. Also, if downsizing means that you pay off a large chunk of your mortgage with the equity from your old home, this may trigger an early repayment charge (but not as big as if you’d paid off the whole loan).
When is it not a good idea to port my mortgage?
If you’ve had the same mortgage long enough to mean that there are no early repayment fees, the main reason for porting your mortgage no longer applies. You will usually be able to find a better deal by switching to a new mortgage.
Also, if your circumstances have changed (for example, your income has fallen or you have become self-employed) you may no longer meet the lending criteria for the mortgage you want to port. Finally, if your current deal will expire soon anyway, you’ll probably want to remortgage when it does – so it may make sense just to get a new mortgage now.
How do I decide whether or not to port?
To see if porting your mortgage is a good idea, consider all your circumstances:
Would you face early redemption fees by moving to a new mortgage?
- Other mortgage deals
Are there better deals available to you? How long would they take to compensate for your early redemption fees (and any arrangement fee)?
- Lending criteria
Would you still qualify for your current mortgage?
- Borrowing more
Do you need a top-up mortgage? If so, are the overall costs still lower than you could find elsewhere?
Weighing all these factors can be a bit of a juggling act. As you can see, it also requires you to know what other mortgage deals are available to you. Fortunately, a mortgage broker can provide you with exactly that information – and can even do the sums for you. Find yours with our smart connect tool.
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