Moving home when you’ve already got a mortgage is a little different to moving when you own the property outright.
In order to move home, you’ll need to pay your existing mortgage off before taking out a new one on your next property.
You can use the income from the sale of your current home to cover your remaining mortgage repayments, then you can apply for a new mortgage.
If your current mortgage deal is good, the prospect of having to secure a new rate can be daunting.
This is where ‘porting’ comes in. It offers a way to move home while retaining your current mortgage terms, and potentially avoid exit fees.
What does Porting a Mortgage mean?
To port a mortgage is to take out a new mortgage with your current lender while retaining your initial mortgage terms.
In essence, you’re transferring the terms of your current mortgage, not the mortgage loan itself, to your new mortgage.
That means you can retain your current interest rate and repayment plan.
This can be great if you are happy with your current mortgage deal and want to move home.
Is my mortgage portable?
Not all mortgages are portable. The easiest way to find out if you can port your mortgage is to contact your lender directly and ask.
Your mortgage agreement may not allow you to port, or you may no longer qualify for your current mortgage deal, so you should talk to your lender before proceeding.
Porting is only possible when your new mortgage is with your current lender, so if you want to go with a different lender you won’t be able to port.
If you like your current mortgage rate then porting is well worth your time as it’s the only way to secure a new mortgage while retaining your current deal.
Conversely, if you’re unhappy with your current rate then you’d be better off exploring your options elsewhere and not porting.
Are there fees for paying off my mortgage early?
As part of the process, you'll need to pay off your current mortgage which is typically done with the income from the sale of your current home.
After paying off the remainder of your mortgage, you’ll be left with your equity in cash. You can use this as a deposit for your next home.
Mind that some lenders require an Early Repayment Charge (ERC) when you pay off your existing mortgage, typically 1% to 5% of how much you still owe, and potentially an exit fee too which is usually a few hundred pounds.
However, a lot of lenders don’t charge an ERC or an exit fee when you port as you aren’t breaking the terms of your current deal.
This could save you significant money, so you should contact your lender to find out if they charge exit fees when porting.
What if I need to borrow more, or less, for my new home?
If your new property is worth more than your current property, you’ll need to borrow more.
You can still port your existing mortgage, but you should ask your lender if you can increase your current mortgage loan.
You may need to take out another mortgage to cover the extra value.
If your new home is worth less than your current home, you’ll have to pay the difference when you port your mortgage.
This can be from your savings or from the proceeds of the sale of your current property.
The easiest porting scenario is when your new property is the same value as your current home. That means you don’t need to borrow any more than you already have, or have to pay the difference.
I can’t port my mortgage, what now?
Lenders don’t allow all types of mortgages to be ported, so to avoid disappointment the first thing you should do is contact your lender to enquire about porting.
As already explained, your mortgage agreement may not allow porting, or you may no longer qualify for the rate you currently have secured. In these cases, your lender would not allow you to port.
If your lender says you can’t port, do not despair. While it is a shame you can’t keep your current rate, it does mean you are free to look elsewhere.
You can explore your mortgage options with over 70 lenders with a no-obligation mortgage appointment with our partner Embrace Financial Services. Book an appointment for a time that suits you.
If you need to sell your current home in your move, it's best to start the selling process as soon as possible. Our local property experts are offering a FREE property valuation so that you can get started.
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YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Your initial mortgage appointment is without obligation. Embrace Financial Services normally charge a fee for their services; however, it is payable only on the submission of your mortgage application. The fee will depend on your circumstances but the standard fee is £549. Complex cases usually attract a higher fee. Embrace Financial Services will discuss and agree the fee with you prior to submitting any mortgage application.
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