Porting: What Does It Mean For Your Mortgage?
What is porting a mortgage?
Thinking of moving house? If you have a mortgage on your existing property you may be able to move it to a new property. It’s a process known as porting, and it allows you to transfer your current mortgage product to your new property. Customers normally only port their mortgage if their current loan is on a cheaper rate, and/or if they have an Early Repayment Penalty which can be avoided. The aim is to save money. There’s no guarantee that your lender will allow you to port your mortgage though, so it’s worthwhile bearing this in mind. While porting is an effective solution for many homeowners, it’s not always the best option for everyone. Our team is here to help you to establish whether or not it’s right for you, based on your current circumstances.
How does porting a mortgage work?
When you find a new property to move to, you will have to submit a new mortgage application. This is because you don’t transfer your mortgage loan, just the mortgage product terms and conditions. Normally, you’ll be able to borrow the same amount as your original loan on the new product – however, if you do need to borrow more, this may also be possible depending on your circumstances and the lender.
To confirm you can afford the mortgage, the lender will conduct a full assessment of your circumstances, and this typically includes a review of your income, any debts and your credit history. The lender will also instruct a surveyor to check that the property is suitable collateral for the mortgage. Once the lender is happy with your application, you will normally receive a mortgage offer. The mortgage on your previous property will be settled on the sale and the product transferred to your new home. Buyers normally have between 30- 90 days to port after redeeming the mortgage on their current property.
Things to be aware of when thinking about porting your mortgage
If you are thinking about porting your existing mortgage, there are a number of factors you should consider:
You’ll need to reapply for the mortgage
You’ll need to pass the lender’s affordability assessment. If your circumstances have changed you may not qualify for a mortgage. E.g. if you’ve reduced your hours and are earning less or have taken out further credit commitments.
Not all properties are acceptable to lenders
There are some situations where the lender won’t provide a mortgage due to an issue related to the property. This might be due to its location, condition or the type of property.
Some lenders may not want to increase your borrowing
If you are intending to buy a more expensive property the lender may not necessarily allow you to borrow more. This is often the case if the loan takes you to the top of your maximum budget.
It can be more expensive to borrow – If you need to borrow more to buy your property, the additional loan won’t usually be at the original rate. The additional borrowing will often show as a separate mortgage or as a ‘sub-account’ to the original mortgage and may have a separate entry on your credit file. The increased borrowing will often be at a higher rate and you may have to pay additional fees.
Your age could limit how long you can lend for
In most cases lenders will expect the mortgage to be paid off before you reach retirement age. If you wish to extend the term and borrow more, you may be limited as to how long you can lend if you will be retiring during the term. This could also mean that you will need to take the mortgage out for a shorter term which will also mean increased monthly payments.
How to prepare for porting a mortgage
There are a number of things you can do to help you prepare for porting your mortgage. First, you need to check that you can port your mortgage as not all mortgages allow this. It’s also worth considering your current circumstances and how likely it is you’ll be able to port the mortgage. If all checks out, you can go ahead and put your property on the market and start looking for a new property to move to. You’ll need the address details for your new property in order for our team to submit your mortgage application and get you an offer.
Get advice on porting your mortgage
There’s a lot to think about when porting your mortgage so if you aren’t sure whether its the right option for you, speak to our friendly team for advice. Our team will review your current situation and confirm whether you can port your mortgage and whether porting is right for what you are trying to achieve. We’ve advised many other borrowers in the same situation to make the decision that was right for them and we can do the same for you.
If you are intending to move to a more expensive property and need a bigger mortgage our team can also advise on the choice of deals that are available to you. Sometimes porting might not be the best option and we’ll be honest about that if we think there is a more suitable alternative available. Speak to our team of mortgage experts to find out if you can port your mortgage.