The Pros and Cons of Mortgage Portability (2024)

FAQs

What are the pros and cons of porting a mortgage? ›

Porting a mortgage could save you money when buying a new house. Not only can you avoid prepayment penalties, you can often retain your same interest rate. One drawback is the limited time you have to do this in, during which you'll have to both buy a new home and sell your old one.

Are there any fees for porting my mortgage? There are no 'porting fees' as such. But you will usually need to pay a valuation fee so that your lender can check that the new property is worth what you plan to pay for it.

What happens if I port my mortgage to a more expensive property? Moving to a pricier home means you'll likely need additional borrowing. The equity from your current home can serve as a deposit, but any extra borrowing will be subject to the lender's current rates.

A mortgage provider will want to see at least two or three years of income records and tax returns to estimate your average annual income. It may be more difficult to port a mortgage if your employment status is considered a higher risk, such as being newly self-employed or within a probationary employment period.

However, as this isn't always possible, a significant percentage of lenders will still allow you to port your mortgage product provided that you complete on the new property within a certain period of time after redeeming the old mortgage. This period would probably be in the range of 30 to 90 days.

In certain circ*mstances when porting your mortgage deal, you may need to pay an Early Repayment Charge (ERC). However your lender may refund any ERCs paid depending on when your new mortgage completes.

Partial Port (Borrowing less)

You can port the mortgage product to the smaller loan amount. However, the difference must be repaid on completion of the new loan, and an ERC will apply to this amount.

But there are drawbacks to consider too. The biggest one is that sticking with your current lender without checking the entire market first could mean you miss out on a better deal that's available elsewhere. This is why you should always speak to a broker before agreeing to port.

If the sale and purchase doesn't happen simultaneously, most lenders offer a period of grace, usually up to 30 days. If the delay is longer, most won't allow you to port your current deal. However, if you opt for a deal with the same lender, they may offer to refund any early repayment charge you've paid.

Here's a list of companies that MAY allow mortgage "porting". Bank of America Wells Fargo Chase U.S. Bank PNC Bank First Republic Bank Capital One Quicken Loans Mortgage Porting is the process of transferring your existing mortgage from one property to another.

Why won't my bank let me port my mortgage? ›

Issues such as stricter lender criteria or changes in your personal circ*mstances may affect your ability to port your mortgage, as could a missed mortgage payment in the past or wanting to mortgage for a value different to the amount you've already taken out.

Fannie Mae generally will consider requests for transfers of either all or a portion of the mortgage loans and/or acquired properties that a servicer services and/or manages for it.

Unable to Access Lower Rates: If interest rates have fallen since you started your mortgage term, porting may mean that you miss out on the opportunity to secure a lower interest rate. If current mortgage rates are significantly lower than your existing rate, breaking your existing mortgage may be more cost-effective.

The short answer to the question is yes, you can transfer a mortgage to another person and there are several ways of doing this. Our latest article explores the most common approach, known as 'Transfer of Equity. ' It's crucial to seek legal advice to ensure you're making the right decisions for your situation.

Most times, people making a mortgage switch are doing so to take advantage of a lower interest rate elsewhere. However, the penalties are probably more than the interest you'd save on making a switch before your maturity date. If you can, it's better to wait until your mortgage is up for renewal.

Finding a new deal could let you reduce the loan size and potentially get you a cheaper interest rate. Be aware, though, that if you're currently locked into a fixed-term mortgage deal, you'll usually face a charge for leaving. You'll need to weigh up the potential savings in interest against the cost of switching.

You could save money by switching, but you may have to pay a fee for leaving the fixed-rate early. If you are coming towards the end of your fixed term, you need to decide if you should switch to a variable or you may prefer to fix again.