The decision to move house is often driven by necessity, due to factors such as a growing family or the need to relocate. Those currently locked into a fixed-term mortgage can often feel trapped, and remortgaging early can incur costly early repayment charges (ERCs).
Many lenders, however, will allow you to “port” your mortgage deal to a brand new property. In this guide, we will explore the process, requirements and key considerations of porting your mortgage.
What does it mean to port your mortgage?
Mortgage porting is the process of transferring your current mortgage deal to a new property. Rather than ending your current mortgage and taking out a new one, which often results in ERCs, you move your mortgage with you, keeping the same lender and interest rate.
Most fixed-rate mortgages are portable, however the ability to port is subject to lender approval.
The benefits of porting your mortgage:
Porting your mortgage has many key benefits, including:
- Avoiding ERCs
Porting your mortgage does not involve ending your current mortgage deal, and thus does not incur any early repayment charges.
- Retains your interest rate
If your current mortgage deal has a competitive rate, porting your mortgage allows you to retain that benefit and avoid being placed on a higher rate.
- Simplifies the process
Porting your mortgage avoids the administrative process of applying for a brand new mortgage, provided that you meet the lender’s criteria.
Key considerations when porting your mortgage
While porting your mortgage has its benefits, there are several key considerations to be made when making your decision. These include:
- Property value difference
If you are downsizing to a cheaper property, you lender may require a partial repayment, which may still trigger early repayment charges.
- Top-Up Mortgage
If additional borrowing is required, it may be on different terms, which is likely to affect your overall monthly repayments.
- Timing and coordination
The sale of your existing property, and the purchase of the new one, must align correctly to ensure a smooth porting process.
- Lender approval
Porting your mortgage is subject to all of the same affordability and credit checks as a brand new mortgage application.
The process of porting your mortgage
Step 1: Check whether your mortgage is portable
The initial step is to contact your lender and confirm whether or not porting is an option in your current deal. While most lenders allow fixed-term mortgages to be ported, some may impose restrictions.
Step 2: Get approval for your new property
If your mortgage is portable, your lender will still need to approve the new property. They will conduct a valuation to ensure that the new property meets their criteria. If the new property is more expensive, you may need to borrow additional funds through a ‘topup’ mortgage.
Step 3: Affordability assessments
Porting your mortgage requires you to pass a fresh affordability assessment, during which the lender will assess your income, credit score and financial commitments to ensure that you can afford the mortgage, even if your existing deal remains unchanged.
Step 4: Pay applicable fees
While porting your mortgage offers a way to avoid paying ERCs, additional fees may apply. These can include valuation costs, arrangement fees and legal costs.
Step 5: Complete the Sale and Purchase
Once the mortgage has been approved and all necessary checks complete, you can proceed with the sale of your existing home and the purchase of the new one. The mortgage funds will be transferred accordingly by the lender, allowing for a seamless transition.
What if porting your mortgage isn’t an option?
If porting is unavailable, or you are unable to gain approval, you will need to explore alternative options. These may include:
- Paying the Early Repayment Charges
While paying ERCs can be costly, it may be beneficial if you are able to secure a better mortgage deal than your current one.
- Taking out a new mortgage
If your circumstances or the lender’s criteria have changed, you may need to apply for a new mortgage deal instead.
Get Expert Mortgage Advice
Porting a mortgage can be complex, and every situation is unique. To ensure you make the right financial decision, it’s crucial to seek expert mortgage advice.
At Cooper Associates Mortgages, our expert advisers can guide you through the mortgage porting process, helping you assess your options and secure the best outcome for your move.
Get in touch with us today for a fee-free, no-obligation consultation.
