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Introduction to porting your mortgage

If you’re already a homeowner but intend to move to a new home, you can often take your existing mortgage.

This is called ‘porting’ your mortgage and can be more cost-effective than taking out a new mortgage.

When you come to buy your next home, you can, of course, takeout a whole new mortgage.

The new mortgage pays off your old mortgage, and you move onto a whole new deal.

However, there can be extra costs involved, which is why some people choose to keep their current mortgage and transfer it to the new property.

Here’s a quick introduction to how this works.

What are the possible drawbacks of a new mortgage?

The terms of your current mortgage deal may not fit in with your plans to move.

For example, if you want to move soon but your deal has some time left to run, you may face early repayment fees (also known as redemption penalties) if you pay it off before a specific date.

You can also avoid paying an exit fee (usually a few hundred pounds) and an arrangement fee for a new mortgage.

Equally, the terms of your current mortgage deal may be attractive and hard to replicate elsewhere, making it cheaper if you can keep it.

Depending on your current mortgage circ*mstances, the total savings from porting a mortgage can potentially run into thousands of pounds.

How do I port my mortgage?

The first step is to ask your lender if you can transfer your mortgage to the new property.

Some mortgage deals don’t allow this, so it’s a good idea when taking out a mortgage to ask yourbroker to select a portable mortgage just in case.

You will then have to reapply for your current mortgage to port it due to strict lending rules.

If your circ*mstances have changed and made you a higher-risk borrower, this may prevent you from transferring the mortgage to a new property, but you will still be allowed to keep it on your current home if you stay there.

How long does it take to port a mortgage?

If your lender lets you progress with a mortgage port, moving a mortgage to your new property could take anywhere from 30 days to three months to complete, giving you time to move into your new property.

Can I borrow more money when porting a mortgage?

Many home moves involve buying a more expensive property.

If you can’t make up the difference in cash, you may need to borrow more money.

Your existing lender may or may not allow you to do this. If it doesn’t, you may have no option but to seek a new mortgage with another lender (a broker can help).

However, your lender may allow you to take out an additional mortgage with them (sometimes called a ‘top-up’ mortgage) to cover the extra amount.

This top-up mortgage must be with the same provider, which will limit your options, so you may find it is on less favourable terms.

The deal will also have a different end date, making it essential for you to keep track of both your mortgages.

You’ll also have to pass an affordability check on the new loan.

What if I’m moving to a smaller or larger property?

You could still port your mortgage if you’re moving to a different size property, although this isn’t always guaranteed.

Moving to a significantly larger property, for example, could mean that your existing mortgage isn’t sufficient or that you wouldn’t be able to make repayments.

In these cases, you could be outright rejected for a mortgage or have to apply for a deal with different terms. The same applies if you are downsizing.

The existing terms of your mortgage may no longer be valid for your living situation. If you intend to pay for your new property using released equity from your previous home, this could also trigger early repayment fees.

What if my mortgage isn’t portable?

If you can’t port your mortgage, your only options will be to pay early repayment fees to pay off your mortgage early or stay in your current property until you have paid your mortgage there.

While many lenders are willing to help you port your mortgage if possible, it isn’t something you should always expect to be on offer.

When is it not a good idea to port my mortgage?

If you’ve had the same mortgage long enough to mean there are no early repayment fees, the main reason for porting your mortgage no longer applies.

You will usually find a better deal by switching to a new mortgage.

Also, if your circ*mstances have changed (for example, your income has fallen or you have become self-employed), you may no longer meet the lending criteria for the mortgage you want to port.

Finally, if your current deal will expire soon anyway, you’ll probably want to remortgage when it does – so it may make sense to get a new mortgage.

How do I decide whether or not to port?

To see if porting your mortgage is a good idea, consider all your circ*mstances:

• Costs: would you face early redemption fees by moving to a new mortgage?

• Other mortgage deals: are there better deals available to you? How long would it take to compensate for your early redemption fees (and any arrangement fee)?

• Lending criteria: would you still qualify for your current mortgage?

• Borrowing more: do you need a top-up mortgage? If so, are the overall costs still lower than you could find elsewhere?

Weighing up all these factors can be a bit of a juggling act.

As you can see, it also requires you to know what other mortgage deals are available.

Fortunately, you can find a mortgage broker via Unbiased who can provide you with that information – and can even do the sums for you.