Are you considering a move to a new home but want to stay within your favourable mortgage terms? The process of ‘porting’ your mortgage allows you to do just that. Let’s delve into how this unique opportunity works.
What exactly is “porting a mortgage”?
Porting your mortgage offers a convenient way to transfer the current mortgage terms from your existing property to the one you plan to purchase next. If your mortgage agreement permits this, it falls under a “portable mortgage.” This process can help you avoid the complexities of starting anew with a different lender.
How does the process of porting a mortgage unfold?
Talking about ‘taking your mortgage with you’ is more complex than packing it up and moving. The process involves paying off your old loan when you sell your current home. Then, you secure a new home loan from the same lender, with the same terms, when you buy your new property.
For instance, Suppose you’re ten years into a 35-year mortgage term with an outstanding balance of £250,000. When you sell your home, you settle the old mortgage and initiate a new 25-year term, still owing £250,000. (There’s also flexibility to borrow more or less, explained below.)
What steps are involved in porting a mortgage?
Porting requires re-applying for your original mortgage deal. You’re taking out a new loan under the exact terms and interest rates of your existing one.
Re-applying for your original deal resembles applying for a new mortgage. Your lender will assess your income, expenses, credit score, and personal situation to ensure you meet their eligibility criteria. They’ll also conduct a mortgage valuation on your new property to confirm its value aligns with your borrowing amount.
Can your request to port a mortgage be declined?
It’s crucial to note that not all mortgages are portable. You should consult your lender or review your paperwork to confirm portability.
Even if porting is an option, securing approval is only guaranteed if it’s the same lender. You’ll need a new offer letter and undergo another credit assessment, income review, and property valuation for the new purchase.
Your lender may only accept your porting request if you meet their criteria due to changes like a lower property value, altered credit rating, reduced income, or shifts in personal circumstances.
Why consider porting your mortgage?
What are the advantages and disadvantages? Porting appeals to some due to:
- Avoiding the complexities of applying with a new lender.
- Belief in having the best possible interest rate.
- Desire to retain specific terms and conditions from the current agreement.
One significant benefit of porting is that it often involves no exit fees or early repayment charges. By sticking with your current deal, you could save money, providing financial security during the transition.
However, the decision could be more straightforward. Exploring the broader market may uncover better deals, prompting many to opt for remortgage or negotiating with their existing lender. Consulting a mortgage broker can provide clarity based on your unique circumstances.
Can I adjust my mortgage amount during porting?
If moving to a pricier property, you can request additional borrowing, but approval is only guaranteed if it is not guaranteed. Your lender might propose a separate top-up mortgage with different terms and fees.
Repaying the old mortgage and applying for a new, larger mortgage might be more practical for significant adjustments.
Can I reduce my mortgage during porting?
If downsizing, you’ll need to repay the excess to your lender with some leniency before fees kick in.
Is remortgaging a viable alternative to porting?
For some, obtaining a new mortgage proves more financially beneficial. It involves settling your existing mortgage with sale proceeds and securing a new one for the new property.
However, be cautious about early repayment charges if ending a fixed-rate deal prematurely.
How do I decide between porting and remortgaging?
Consult your lender regarding your mortgage deal’s end date. Pursuing a new lender might be faster if the end date is imminent due to legal processes involved in property transfers.
For personalized guidance and to ensure you make the best decision for your circumstances, it’s always a good idea to seek advice from mortgage experts. They can assess your options and guide your decision-making, providing support and reassurance. Reach out to our experienced advisers, and we’ll give an overview of available options while delving into the best-suited solution for you. Call us on 0333 335 6595 or message us to get started!
