If you plan to buy a new home, and you are already benefiting from a low-cost fixed, tracker or variable rate mortgage, then you might want to keep your deal when you move.
Transferring your mortgage deal from one property to another is called ‘porting’. In your complete guide, we look at mortgage porting, how it works, the pros and cons, and what else to consider if you’re moving home.
What is ‘porting’?
If you currently have a fixed, tracker or variable rate mortgage and you want to move home, you may want to take your mortgage deal with you.
Porting is the process of transferring a mortgage product from one property to another. Porting enables you to take your existing fixed, discounted or tracker rate mortgage with you when you move, allowing you to benefit from your existing interest rate and to help you to avoid paying any early repayment charges that might be due.
Most mortgages are portable and so can be taken with you when you move home. However, porting your mortgage is still subject to a range of factors.
How does porting work?
When you buy a new house, you will need to take out a new mortgage. At the point you sell your home, your existing mortgage is redeemed (paid off) and you take out a brand-new mortgage on your new home. You don’t ‘transfer’ an old mortgage onto a new property.
Porting a mortgage allows you to continue to benefit from the same interest rate. The crucial point is that it is not your mortgage that is transferred onto the new property, but the rate, terms and conditions of your mortgage.
When you move home, you must apply for a new mortgage in the usual way. If you want to port your mortgage you will apply to the lender who your current mortgage is with.
Your existing 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 agree the mortgage you want.
Only when your lender has agreed your new mortgage, will they consider porting your existing fixed, discounted or tracker rate deal onto the new property.
The key thing to remember is that you will go through the normal mortgage application and underwriting process when you apply for the mortgage on your new home. Don’t assume that your lender will automatically transfer your mortgage to the property you are buying.
Pros and cons of porting a mortgage
The main advantages of porting a mortgage are:
You avoid paying an early repayment charge. If you are part-way through a fixed, tracker or variable rate mortgage deal, there may be early repayment charges for paying off your mortgage. By transferring the deal onto a new property, you can avoid breaking the conditions of the deal (by repaying the mortgage) and paying these charges
Your lender may look sympathetically on your new application as you have an existing relationship with them
You can retain a highly competitive rate, which may be better than the current prevailing deals in the market.
The main disadvantages of porting your mortgage are:
Your existing deal might not be as good as the current ‘best buys’
Your lender may not offer you as much (in terms of the mortgage size) as another lender, or otherwise offer less attractive terms
You might have to increase the size of your mortgage, and this borrowing could be on a different interest rate. Additionally, this deal might finish at a different date, making it difficult to remortgage in the future.
When is porting your mortgage the best choice?
If you have a very low interest rate, for example, a competitive fixed rate, porting your mortgage can be beneficial as you can maintain your low repayments.
If there are significant early repayment charges for repaying your current mortgage, then you may also be better sticking with your deal. If you don’t, you could face thousands of pounds in charges.
When might I not want to port my mortgage?
If your current mortgage deal is not competitive, then you may wish to consider a new product when you move. If you’re considering this, it’s worth looking at how much you will pay in early repayment charges and work out whether the savings you will make will outweigh the impact of these charges.
You’ll need to take all the rates and fees into account to work out which is the best option. We can help you to cost up the various options to decide which is the best route to take.
Get in touch
Are you moving home? Do you need a new mortgage, or want to port your existing deal? Get in touch. Email enquire@london-money.co.uk or call (0207) 808 4120 to find out more.