Porting your mortgage
Porting a mortgage means you transfer your existing mortgage from your current property to a new one but this isn't always the best option.
Having the option to port your mortgage when you move house is useful.
Without this option, you’ll be forced to pay off your mortgage early, and this will probably involve exit fees and early repayment charges.
However, just because you have the opportunity to port your mortgage, it doesn’t mean you should.
Sometimes, finding a new mortgage will be the most cost-effective option.
What does “porting a mortgage mean”?
Porting a mortgage means you transfer your existing mortgage from your current property to a new one. However, not all mortgages offer this and it can depend on the specific terms you agreed to. Make sure to check with your lender before considering this option.
How does porting a mortgage work?
If you want to port your mortgage, you’ll need to apply to your lender.
They will put you through similar affordability assessments, credit checks and property checks that you went through before originally being granted your mortgage. This process is likely to involve arrangement fees and valuation fees. You can expect it to take as long as it did when buying your first home.
If your financial situation has worsened since being accepted for your mortgage, the lender may refuse your application.
In this case, you’ll have to remortgage with a different provider.
Porting a mortgage when you move to a more expensive house
If you move to a more expensive house, porting your mortgage will involve an application to borrow more money.
Your lender may allow this, but there could be a fee involved. In many cases, you may only be offered the chance to do this at a higher interest rate, or by taking out a second mortgage.
To avoid these undesirable scenarios, you may be able to pay a cash deposit to cover the additional value. Many homeowners who sell their house at a profit choose to do this.
Porting a mortgage when you move to a cheaper house
Porting your mortgage tends to be simpler when you’re moving to a cheaper property because you won’t need to apply for additional funding and it should be easier to pass the affordability checks.
Still, you’ll need to repay the outstanding amount back to your lender, and it’s likely you’ll face an early repayment charge for doing this.
The alternative to porting a mortgage
The alternative to porting a mortgage is to pay it off early and remortgage.
If your current mortgage isn’t portable or you’re refused the option to port it, this is your only remaining option.
If you’re stuck on a high rate with your current mortgage provider, or the fees associated with porting are particularly high, remortgaging might be more cost-effective.
It’s best to weigh up both options by calculating how much each will cost you in the long-term.
It’s recommended to speak to a professional mortgage adviser, who will be able to point you towards the best remortgage deals likely to be available to you.
Becoming a mortgage prisoner
It’s possible that you won’t be able to afford to pay off your mortgage early, perhaps due to the associated fees or because you’re in negative equity. In this case, you’ll become what is known as a “mortgage prisoner” and won’t be able to move house.
At the very least, a “portable mortgage” gives you another option to prevent this from happening.
What are the pros and cons of porting your mortgage?
- This can often work out cheaper than remortgaging.
- It’s typically easier to be approved for a port than a remortgage.
- As such, a portable mortgage offers you good protection against becoming a “mortgage prisoner”.
- There are numerous fees involved.
- There’s no guarantee you’ll be approved.
- You may not be offered a competitive interest rate.
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