Guide to porting a mortgage: mortgage porting explained
Want to move but tied into a fixed rate? Matt Halder of Threshold Mortgages explains how to port your current mortgage to a new home, and when it might be in your best interests to do so.
Threshold Mortgages are experts in new build mortgages and Government buying schemes to get you moving.
Do you want to move home but are put off by early redemption charges? Perhaps you’re fixed into a low rate mortgage and don’t want to risk your monthly repayments going up?
These are both valid concerns when deciding whether to sell or stay put – particularly in the current climate. At the time of writing, interest rates have risen 13 times and are set to increase further.
On rare occasions the choice to sell may not be your choice at all but forced upon you by circumstance. Perhaps your company is relocating and you need to move to keep your job. Or maybe an illness forces you to give up work and you suddenly find yourself earning less.
At times like these you might feel your only option is to take a hit on your lender’s early redemption charges and apply for a new mortgage at today’s rates. However, there is another, potentially more attractive, option available to you: porting your existing mortgage to a new property.
Porting a mortgage: what does it mean?
Porting a mortgage means that you transfer your current mortgage product from the property you are selling to the property you are buying.
Instead of having to exit your mortgage term early and take out a new one at a revised rate, you can transfer your existing rate to the new property.
What does it involve?
Although choosing to port your mortgage means you’ll be retaining your existing interest rate, you may still need to pass an eligibility check in order to satisfy the lender that you meet the affordability criteria for the loan.
As part of the porting process the lender may also carry out a valuation on your new home, to ensure it's a solid investment to secure your loan against.
What happens if the new property is less or more than my current home?
This is very common when porting a mortgage. After all, it’s likely that your new home will have a different purchase price to the home you’re selling.
If you're buying a more expensive property and need to borrow more money, you'll need to take out a second loan to make up the difference. This loan must be with the same lender as your ported mortgage and you must select a product from their current range. This means the rate may be higher than your ported mortgage rate.
If your new home costs less, you will usually have to pay an early repayment charge on the portion of the loan that you are repaying.
What are the pros and cons of porting a mortgage?
Porting your mortgage can allow you to move home while you’re still within a fixed rate interest period and keep your existing rate. In some cases it can also save you from having to pay early repayment charges.
On the flipside, porting a mortgage means that you’ll need to reapply for the loan and may not be accepted for it. You may also have to pay early repayment charges to your lender if you need to pay back any part of the loan early.
Is it better to port a mortgage?
Potentially, if interest rates have increased since you took out your loan and you would incur early repayment charges by exiting your mortgage early.
What does it mean to port a mortgage?
Porting a mortgage means you’re transferring your mortgage product to a new property.
How long do you have to port a mortgage?
This depends on your mortgage lender and whether your sale and purchase complete on the same day. If you sell your property before you complete on your new one you usually have between 30-90 days to port the mortgage.
Is it easier to port a mortgage?
Porting a mortgage is no easier than applying for a new mortgage. You will need to undergo affordability checks with your lender to ensure you can afford the repayments. You'll also need to fit the lending criteria.
Do you pay stamp duty when porting a mortgage?
Yes. You are still liable for stamp duty on your new home when porting a mortgage.
Do you get credit checked when porting a mortgage?
Yes. A lender will usually check your credit score as part of their affordability checks when porting a mortgage.
How do I port my mortgage?
Speak to your lender or the broker that arranged your mortgage and let them know that you would like to port your mortgage.
When is it not a good idea to port my mortgage?
It may not make financial sense if interest rates have lowered since you took out your existing mortgage and you would be liable to pay an early repayment charge on your existing loan.
Do all lenders allow you to port a mortgage?
Most lenders will allow you to port a mortgage, subject to their porting criteria.
Considering porting your mortgage?
For impartial advice about porting your mortgage, you can contact Threshold at 03300 249 115 or email an enquiry using their online form.
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