The ability to ‘port’ your mortgage could make or break your next house move. Here’s a roundup of what you need to know.
What does porting mean?
Porting a mortgage means transferring your current mortgage deal to a different property when you move house.
Why would you port your mortgage?
Most likely because you are tied into your current mortgage deal. This means if you were to pay it off and take out a new mortgage for your next home, you’d be hit with early repayment charges (ERCs)
Equally, you may not be tied in but want to keep hold of a particularly competitive rate. Lifetime tracker mortgages taken out before the 2008 credit crunch for example were – and still are – incredibly cheap.
Are all mortgages portable?
These days the majority of mortgages – whether they are fixed or variable – are portable.
Some smaller or more specialist lenders may not offer portable deals however, and it’s also less common among buy-to-let mortgages.
It’s always worth double-checking with the lender or mortgage broker whether a deal you are applying for can be ported.
Are there any circumstances where I won’t be able to port?
It’s not as simple as just packing up your mortgage and taking it with you to another property. The lender will underwrite the whole loan again and the numbers will need to stack up.
Here are the most common reasons why it may not be possible to port your mortgage:
- Your circumstances have changed: You are earning less, have bigger monthly outgoings or your employment status has changed – say from permanent to contractor
- Your credit score has gone down: You have missed payments on your mortgage or other borrowing
- The new property is outside the lender’s remit: For example, it’s above a fast food outlet or is of unusual construction
- The lender’s valuation of the new property is too low: This could limit the amount of borrowing you have available or access to the new mortgage deal you need
What happens if my lender refuses to port my mortgage?
If you cannot get out of your current mortgage or make the sums work for your new home, you'll just need to wait until your mortgage deal has ended - which may not be long if you have only tied in for two years.
If the lender declines on the basis of the property itself, you may want to consider if you want to buy – or at the least get a comprehensive survey.
What happens if I port my mortgage to a more expensive property?
You can use any equity in your current home (the difference between what you sell it for and what you owe on your mortgage) as a deposit towards your new one. And, of course, any savings you have built up.
But if the amount remaining exceeds your current mortgage, you’ll need to top it up with additional borrowing.
Rather than being the same as your current mortgage, this extra slice of loan will be priced on whatever deals the lender is offering at the time.
It’s a good idea to try marry up any tie-ins between the two parts of your mortgage. For example, if you only have one year remaining of a fix on your main mortgage, you may want to avoid two-year tie-ins on your top-up lending.
What about porting a mortgage to a cheaper house?
If you are downsizing or taking a step down the property ladder, you may be in a position to pay back some of what you owe to the mortgage lender – and most mortgage deals will allow you to repay up to 10% a year of the outstanding balance each year without a charge.
If you want to repay more than this and are tied into your deal, ERCs will apply.
Are there fees involved to move my mortgage?
There are no ‘porting fees’ as such. Although you may be charged for a valuation that the lender will carry out to check your new property.
Can I still port if I don’t sell and buy at the same time?
In some circumstances, there may be an unavoidable delay between when you sell your current property and when you buy the next one – and the mortgage debt is paid back to the lender.
But in this case, most lenders will still allow you to port across the same deal usually with a grace period of around three months.
While you will need to pay any ERCs initially, they will be fully or partially refunded when you take the loan onto the new property.