When purchasing a new property, your mortgage can often be ‘ported’ over.
However, it’s not guaranteed that your lender will allow this and you could end up borrowing at a higher rate than you need to.
Why wouldn’t the lender allow it?
When porting your mortgage, you have to re-apply. If your circumstances have changed, if you earn less than when you first got your mortgage, for example, then you may not qualify.
Even if your situation hasn’t changed, the lender’s criteria might have, so it may not be as easy to get a mortgage now as it was previously.
What if my new property is worth more than my old one?
If the property that you’re moving to is more expensive, then you may need to borrow additional cash. The lender can agree to do this but they may put the additional borrowing onto a separate mortgage product, so you could end up with two loans rather than one.
As you will be porting your mortgage over, you will only be able to use the lender that you currently have your mortgage with, which doesn’t give you access to the wider market and leaves you with little choice on rates.
The lender that you’re with may not have the most competitive rates, leaving you paying a higher rate of interest.
If I can’t port, can I just switch to a new mortgage?
You can, but you will have to pay a number of fees, which could be thousands of pounds. If you can’t afford this and you can’t port, then the chances are that you will have to remain in your current property.
Early Repayment Charge (ERC) – if you’re still in the introductory offer period of your mortgage, you will most definitely have to pay an ERC. The cost of these can range from 1-5% of your outstanding debt, depending on how far into your introductory offer you are.
Exit Fee – when you pay off a mortgage, even when you’re just switching to a new lender, you have to pay an exit, deeds release or final fee of a few hundred pounds.
Arrangement and Valuation Fee – when you exit your old deal, you will need to pay an arrangement and valuation fee for your new mortgage.
If I can find a cheaper deal instead of porting, what should I do?
Many homeowners will see that, even though they can port their mortgage, the rates that the lender offers them won’t be as attractive as the one that they were on before.
It’s for this reason that you should do the maths before porting your mortgage to ensure that it makes financial sense before committing.
The earlier you leave your mortgage, the bigger the fees will be so to find the cheapest option, you need to figure out the cost of your current deal and compare it to the cost of porting or switching.
What happens once I’ve made my decision?
Regardless of what decision you make, you will have to go through a new mortgage application which means you will have to go through the various lender checks that you did when you first got your mortgage, such as affordability, your credit rating and the suitability of the property.
For advice on porting your mortgage, and whether it is right for your circumstances, speak to one of our expert advisers who will be able to help you with the next steps.