Last reviewed on 28th October 2023 by Martin Alexander (Mortgage Advisor)
Moving home can be exciting, and you may be able to move your current mortgage with you. In this guide, we’ll explain how porting a mortgage from one home to another works.
It’s important to note that porting a mortgage isn’t the same as a mortgage transfer. If you wish to transfer your mortgage to another person instead of another property, please read our article on mortgage transfers.
- What does porting a mortgage mean?
- Factors to consider before porting your mortgage
- What are the pros and cons of porting a mortgage?
- 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?
- Should I port my mortgage or switch to a new deal?
What does porting a mortgage mean?
A portable mortgage means moving your mortgage from one property to another. It’s possible to do this when you move home, but not all mortgages are portable.
Although it sounds as though you can simply move your mortgage over, it’s rarely a straightforward 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 always be moved is because of affordability rules. Although you may pay your mortgage on time, lenders must conduct new affordability tests. This is to ensure your mortgage on your new property is still affordable. Lenders need to do this to comply with financial regulations. Your lender will also have to agree to move your mortgage over.
Factors to consider before porting your mortgage
Before deciding whether to switch or keep your existing deal, there are certain factors to consider.
- You’ll have to reapply for your mortgage whether you switch or keep your deal. If you want to keep your current deal to avoid applying for a new mortgage, think again. You’ll need to apply as if you were taking on a new mortgage, even when moving a mortgage over.
- Although a new deal may seem cheaper, the fees for switching could cost more. It’s important to calculate the overall cost of switching, such as lender arrangement fees, rather than just the mortgage rate. While a cheaper rate can look attractive, it could come with hefty fees, making it more expensive overall.
- You may not be able to borrow more. Your lender will only allow you to borrow a specific amount based on your income. As you already have a mortgage, you could be close to the maximum amount they’ll lend.
- Your lender must provide consent if you wish to port. It’s only sometimes possible to move your mortgage, so check with your current lender before making mortgage plans.
- You’ll undergo a new mortgage assessment. Even if you’re porting, you’ll need to meet your lender’s criteria, including affordability and credit checks. This can prove troublesome if either your credit rating or income has fallen.
It’s important to calculate the options available to you before deciding what to do. Your mortgage advisor can help you with this.
What are the pros and cons of porting a mortgage?
Moving your mortgage to another property has advantages and disadvantages, so you must assess whether porting your deal is viable.
- No early repayment fees – If you keep your current mortgage, then it’s likely you won’t have to pay an early repayment charge (ERC).
- Retain your current mortgage rate – Your lender may allow you to keep your current 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 than a new application. However, you’ll still need to meet their criteria.
- Save time – As you won’t need to apply with a new lender, you can spend more time moving home.
- 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 compared to getting a new mortgage.
- Miss out on better rates – If better mortgage deals are available, you could miss out if you choose to keep your existing mortgage, especially if you’re on a standard variable rate (SVR).
- 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, resulting in two loans at different rates.
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 changed. Again, this is why lenders 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 comply with financial regulations.
You may struggle to move your mortgage if you’re now earning less. 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, your lender may allow you to move your mortgage to your new property. In contrast, if your lender declines, your only option is to pursue a new mortgage elsewhere. Equity in your existing property can allow you to sell and use the proceeds to clear your current mortgage.
Can I port my mortgage to a more expensive property?
Porting your mortgage to a more expensive property is possible, 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 meet the affordability, the chances of porting your mortgage improve.
All lenders have a maximum amount they’ll lend to any given applicant. Porting may prove difficult if you’re already at your maximum borrowing capacity. 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 is another mortgage to your existing loan. A top-up can have additional fees, not to mention having two mortgages. Furthermore, you may be on an entirely different rate for each mortgage.
If you are in this position, speak to your lender to check your options. You can also talk to an advisor who can assess your options across each lender to ensure you won’t overpay.
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.
You won’t need to pay any early repayment charges if your current mortgage is on a standard variable rate (SVR). 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.
Should I port my mortgage or switch to a new deal?
Whether you should port your mortgage or switch to a new deal depends entirely on your circumstances. First, you’ll need to be sure that your lender will allow you to port your mortgage. This is because some lenders 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 you qualify for. Mortgages constantly change, so shop around to see what else is available.
You may have to borrow more if your new property is more expensive than your current home. Even if your interest rate remains the same, you’ll pay 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) if you’re still in your introductory period. This is why you must calculate your options for the most viable outcome. You can view the latest mortgage rates to give you an idea of what’s available.
About the author
Martin is a senior mortgage advisor and has held a CeMAP qualification for over 15 years while also completing an MBA in Global Banking & Finance.