What is Mortgage Porting?James Trafford
Mortgage porting is where you basically take your original mortgage that you have on a home that you are selling and bring it over to your new home. You will carry over to your new home the original terms, the principal balance, and the interest rate. To illustrate, if you still have 15 years left out of 25 years on your mortgage to go, still owing £200,000, this is repaid when your current home is sold, and you take the same terms of 15 years left owing £200,000 over to your new home.
In other words, mortgage porting refers to your mortgage being portable to a new property after selling your current one. While it is true to say that many mortgages are capable of being portable, you will need to speak with your mortgage lender to see if it’s the right thing to do in your circumstances and to see if you meet the criteria.
Porting your mortgage is typically a straightforward process, but can be more complex and trickier in certain circumstances, like when you are planning on moving to a property that is more expensive than the one you are selling. If your current mortgage agreement has penalties for early repayment, you should not have to pay them when you move to a new home.
What is the process of porting a mortgage?
Although you are essentially transferring your original mortgage terms directly over to your new property, you are still required to apply for the deal with your existing lender. You will need to discuss it with your lender to see if it is right in your circumstances and whether the lender allows for it under current conditions. For example, during pandemic conditions, the lender may change the lending criteria. However, if you are successful in transferring your mortgage, your current mortgage rate and terms will be carried over to your new property.
As indicated above, when porting your mortgage, you are still required to re-apply for the mortgage in the usual manner. This means that your lender will look at and analyse your income and expenditure, as well as all your personal circumstances, to make sure that you meet the current criteria, since the criteria may have changed since you first took out your mortgage all those years ago. Where once you met their criteria, you may find that you do not now. Furthermore, your lender will also want to do a mortgage valuation on your new property.
In the event that your lender agrees with porting your mortgage deal, you will be required to complete the sale of your current home and then pay off the mortgage with the proceeds. You can safely assume that it will take between one and three months to port your mortgage.
Under certain circumstances, your lender may refuse to allow you to port your mortgage. Prior to making a final decision, they will likely do an affordability assessment, so it would be advantageous to your application to improve your credit score if feasible (you can do your own credit score check with any of the three main credit rating companies to ascertain where you are). It’s possible that your personal situation has changed, or your lender’s standards have changed. If this is the case, you may not be able to move your mortgage because you don’t meet the new requirements.
Is porting your mortgage expensive?
You will need to speak with your lender to find out about their terms and conditions and the costs involved with porting your mortgage. Some lenders may charge an early repayment charge, while others may not.
Some of the costs that you may incur when porting will include a solicitor for selling a house, mortgage broker fees, survey and valuation fees, and perhaps an early repayment penalty cost.
When is the best time to consider porting a mortgage?
A good reason why many consider porting their mortgage is to retain an excellent deal that they secured in the past with their lender. For example, your current mortgage deal may have a competitive interest rate that you find advantageous. In addition to this, many find that since their mortgage lender has already got all their details on their system, the administrative process can be much quicker to go through.
One thing worth noting at this juncture is that, since the Market Review of 2014, lenders have changed their affordability checking criteria, and so now it is harder to meet the standards than prior to 2014. If your mortgage was taken out before 2014, you may find you don’t meet the criteria if your situation hasn’t changed. You can find out more information here.
Another reason why some decide to port their mortgage is to avoid an early repayment charge when leaving their current mortgage deal early. Sometimes, this charge can be substantial. Even though you could still be charged a porting fee by your lender, it will still likely be less than an early repayment charge.
If you are thinking of porting your mortgage to either retain a favourable mortgage deal or avoid an early repayment charge, it’s advisable to speak with your lender, who will go over all your options and assess your suitability.