Last reviewed on 9th March 2022
Moving home can be an exciting time and you may even be able to take your mortgage deal with you. This is more commonly known as mortgage porting, but not every lender will allow this.
Although mortgage porting can be useful, switching to an entirely new deal may save you money. That being said, you may have good reasons to keep your existing deal.
It’s important to note that mortgage porting isn’t the same as a mortgage transfer. If you wish to transfer your mortgage to another person, instead of another property, then please read our article on mortgage transfers.
- What does porting a mortgage mean?
- What are the pros and cons of porting a mortgage?
- Should I port my mortgage or switch to a new deal?
- Will I still have to go through an affordability test?
- Can I port my mortgage to a more expensive property?
- Can I port a mortgage to a cheaper property?
- Brokers for mortgage porting
What does porting a mortgage mean?
If a mortgage is portable, it means that you can move your mortgage from one property to another. This is usually done at the time of moving home. That being said, not all mortgages are portable.
Although it sounds as though you can simply move your mortgage over, it’s rarely a simple process. Porting involves repaying your existing mortgage on your current property and then resuming your mortgage on your new property.
The reason a mortgage can’t simply be moved is because of affordability rules. Although you may pay your mortgage on time, lenders need to carry out new affordability tests. This is to ensure your mortgage is still affordable on your new property.
Lenders need to do this so that they comply with financial regulations. Your lender will also have to agree on moving your mortgage over, as not all mortgages are portable.
Factors to consider before porting your mortgage
Before deciding on whether to switch or keep your existing deal, there are certain factors to think about.
- You’ll have to reapply for your mortgage, whether you switch or keep your deal
- Although a new deal may seem lower, the fees for switching could cost more
- If needed, it’s possible that you may not be able to borrow more
- Your lender must provide you with consent if you wish to port
- Is your credit good enough for a new mortgage?
It’s important to calculate the options that are available to you before deciding on what to do. Your mortgage advisor will also help you with this.
What are the pros and cons of porting a mortgage?
Moving your mortgage to another property has both advantages and disadvantages, so you’ll need to assess whether porting your deal is viable.
Pros of porting
- No early repayment fees – If you retain your deal with your existing lender, then it’s likely you won’t be charged an early repayment charge (ERC)
- Retain your existing mortgage rate – Your lender may allow you to keep your existing interest rate, even if it’s lower than other available deals on the market
- Easier approval – As you already have a mortgage, your lender can carry out an assessment much quicker in comparison to a new application
- Save time – As you won’t need to apply with a new lender, you can spend more time on moving home
Cons of porting
- You’ll have to reapply – Although approval can be easier with your existing lender, you’ll still have to reapply which can prove difficult if your financial situation has changed
- Borrowing limits – If you wish to borrow more, porting may not be the best option when compared to getting a new mortgage
- Miss out on better rates – The chances are there are better mortgage deals available, so you could miss out if you choose to keep your existing mortgage
- You could end up with two loans – If your new property is more expensive, you’ll have to take on a new mortgage if you don’t quite have the equity which can result in two loans at different rates
Should I port my mortgage or switch to a new deal?
Whether you should port your mortgage or switch to a new deal, depends completely on your own circumstances. First, you’ll need to be sure that your lender will allow you to port your mortgage. This is because certain lenders simply won’t allow you to do this. As a result, you’ll have to find a new mortgage as porting won’t be possible.
You may be wondering whether it’s worth keeping your existing mortgage. Until you know what other lenders are prepared to offer you, it’s difficult to say. You’ll only know if you’re on a great deal by comparing other deals that you qualify for. Mortgages are constantly changing so do shop around to see what else is available.
If your new property is more expensive than your current home, you may have to borrow more. Even if your interest rate remains the same, you’ll be paying more over the mortgage term if your overall loan amount is higher.
In comparison, if your new property is cheaper, you may have to pay an early repayment charge (ERC). This is why you’ll need to calculate your options to decide on the most viable outcome. You can view the latest mortgage rates to give you an idea of what’s available.
Will I still have to go through an affordability test?
If you applied for your mortgage a while ago, the chances are your financial situation has since changed. Again, this is why lenders are advised to carry out new affordability checks.
Lenders will assess both your income and expenditure. Underwriters need to see that there’s enough income to cover repayments. This may sound counterintuitive, especially as you already have a mortgage with your lender. You may even have an impeccable repayment record. Nonetheless, lenders still need to carry out new affordability tests to ensure they’re compliant with financial regulations.
If you’re now earning less, you may struggle to move your mortgage. Having a lot of outstanding credit will bring your affordability figures down. Underwriters will also assess your credit score which can affect your chances of porting.
If you pass your affordability checks, then your lender may allow you to move your mortgage over to your new property. In contrast, if your lender declines, then your only option is to pursue a new mortgage elsewhere. Having equity in your existing property can allow you to sell and use the proceeds to clear your existing mortgage.
Can I port my mortgage to a more expensive property?
It’s possible to port your mortgage to a property that’s more expensive, but you must meet your lender’s criteria. For instance, if you need to borrow more to meet the valuation of your new home, you may not meet the affordability needed to increase your loan amount. If you do meet the affordability, then the chances of porting your mortgage improve.
All lenders have a maximum amount they’ll lend to any given applicant. If you’re already at your maximum borrowing capacity, then porting may prove difficult. If you’re approved, you may be left with a shortfall.
Take a look at the example below:
- Existing property value: £100,000
- Current mortgage balance: £80,000
- Loan to value: 80%
- New property value: £150,000
- Shortfall: £50,000 (£40,000 if you retain your loan to value)
Using this example, the shortfall amount would be £50,000. Unless you pay the shortfall to make up the difference, you’ll have to take out a mortgage top-up.
What is a mortgage top-up?
A mortgage top-up can entail additional fees, not to mention having two mortgages. Furthermore, you may be on an entirely different rate, as it’s technically an additional mortgage to your existing loan.
If you find yourself in this position, speak to your lender to check what your options are. You can also speak to an advisor who can assess all of your options across each lender to ensure that you won’t be overpaying.
Can I port a mortgage to a cheaper property?
If your new home is cheaper than your existing home, you may be subject to an early repayment charge. This is because you’re reducing your loan amount, so in theory, part of your mortgage is paid early.
Take a look at the example below:
- Existing property value: £150,000
- Current mortgage balance: £120,000
- Loan to value: 80%
- New property value: £100,000
- New mortgage balance: £80,000
Using the above example, you could be charged an early repayment charge (ERC). This is because £40,000 of the loan has been paid earlier than anticipated. The loan to value remains at 80%, as the mortgage is being ported over.
If your mortgage is currently on a standard variable rate (SVR), then it’s likely you won’t need to pay any early repayment charges. That being said, it all depends on the conditions of your mortgage. Our specialists can look at your current mortgage conditions to give you a better understanding of what charges you’re likely to pay.
Brokers for mortgage porting
Deciding on whether to port your mortgage or switch to a new deal can seem confusing. Calculating the rates you’re on now, compared to the rates you’ll pay if you switch, isn’t as easy as simply choosing the lowest interest rate. There are a lot of other variables to consider, such as fees, charges and the overall cost of the mortgage.
Mortgages tend to span for decades and selecting the most cost-effective mortgage can save you thousands over the years. Our experts can let you know what your best options are. Furthermore, they’ll even let you know if moving your mortgage is at all possible and worth doing.