What is Mortgage Porting?
If you’re an existing homeowner thinking of moving and have months or years left on your current mortgage product, you should consider whether Porting your mortgage is an option.
If you have a competitive fixed or tracker rate mortgage product then you may want to take your mortgage product with you, rather than be forced to take your new mortgage on a product available at the time.
The process of transferring your mortgage deal from one property to another is called Porting. It enables you to take your existing mortgage product with you when you move and transfer it to the new property without having to pay an early repayment charge.
Are all mortgage products portable?
Most mortgages are portable and so can be taken with you when you move home, but it’s not necessarily an automatic right; you will still need to meet the lender’s criteria, affordability and pass a credit check.
When you move home, you have to apply for a new mortgage in the usual way. Your lender will consider your application based on your income, outgoings and personal circumstances and the new property will be assessed and valued. Your lender will then decide whether they are prepared to lend.
Do I have to buy and sell at the same time?
To port your deal, your lender will generally require you to complete on your sale and purchase on the same day, although some lenders will allow a period of time between sale and purchase – this is called non-simultaneous sale and purchase. Sometimes lenders have different criteria for simultaeneous and non-simultaneous sale and purchase applications – so this is worth checking.
What if I want to borrow more or less than my current mortgage?
If you’re looking to downsize then porting a mortgage could be an attractive option because you won’t be borrowing any extra funds and your current mortgage balance and rate will simply be transferred onto your new home. However you may need to pay a penalty on the amount by which the mortgage is reducing.
If you’re looking to port your mortgage to a more expensive property then you will probably need to take any additional borrowing on a new mortgage product with the same lender. The new product will be separate from your current product and will most likely be a different interest rate and have a different end date. This can create an overlap between products so it’s important to think carefully and take advice on how to best structure your mortgage when porting.
Should I speak to a Mortgage Broker of just go direct to my lender?
You might be worried that you’d be wasted a broker’s time or incur unnecessary costs by taking independent advice, but in light of everything above, we believe it’s still worth seeking independent advice to ensure you get the full picture. Porting is often a good idea but there might be other options to consider and your lender won’t tell you about anything other than how to port with them.
Advantages of porting:
- Product Early Repayment Charges (ERCs) may be avoided by porting your current mortgage product.
- You may be able to keep a low/competitive interest rate.
- You can still work with your trusted broker to get independent advice
Disadvantages of porting:
- Your current mortgage product may be less competitive than something available from other mortgage lenders despite avoiding early repayment charges.
- You may need to borrow additional funds on a different interest rate.
- Your lender may restrict the amount you can borrow.
- Porting is not guaranteed and if your lender won’t let you port then you may incur ERCs
Undray Griffith – 18th August 2023