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What to do when you can't port your mortgage

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I can't port my mortgage, what are my options?

If you’ve got an existing mortgage on your property but are looking to move home, you may be able to ‘port’ your mortgage This means that you effectively move your existing mortgage over to the new property with you when you move. This keeps you on the same terms and conditions as your existing mortgage, whilst simply transferring the mortgage on to the new property.

This process is beneficial as it allows you to avoid early repayment charges and, if you’re on a good rate, means you can usually keep the same interest rates (although be aware that if the value of your new property requires a larger mortgage, you may have to pay higher rates on the excess or take out a second mortgage to cover this).

Why can’t I port my mortgage?

Although many mortgages claim to be ‘portable’, in practice this isn’t always as straightforward as the process suggests and there are no guarantees that your lender will accept your application to port your mortgage, even if you confirmed your mortgage was portable when you took it out.

Issues such as stricter lender criteria or changes in your personal circumstances may affect your ability to port your mortgage, as could a missed mortgage payment in the past or wanting to mortgage for a value different to the amount you’ve already taken out. As porting a mortgage involves a full new application and affordability assessment, you might find that even a portable mortgage is harder to move than you expected.

Porting Application

In asking to port your mortgage, you effectively need to reapply for the mortgage you have already taken out. Although in theory this might seem straightforward, as mortgage lenders’ criteria becomes stricter you may find you’re not eligible for the mortgage you’re after, even if it’s on the same or lower amount than the one you already have.

Following the credit crunch, lenders are now far more stringent when it comes to approving mortgage applications, meaning that people looking to port their mortgage are likely to come across rather more questions and paperwork being asked of them than during their initial application, and stricter requirements in terms of credit checks and affordability tests are likely to apply.

Using the Mortgage Hut’s Mortgage Calculator before you apply for a new mortgage or to port your mortgage can give you a good idea as to whether you’re likely to be approved during the application stage, so you can establish your options early on in the process.

Credit checks & change of circumstances

As part of the application process, lenders will undertake new credit checks on you to ensure that you will be able to afford the repayments on the mortgage. If you’ve had a change in personal circumstances since you initially took out the loan this could affect your ability to be approved.

Some factors to consider may include whether you’re earning less than you were; if you’ve moved from an employed status to self-employed; if you have more debt; or your outgoings have increased, for example, due to the birth of a child.

If you’ve missed any mortgage repayments on your current mortgage, you may also find it difficult to port your mortgage as lenders have been known to reject applications for porting in the hopes that you will voluntarily exit your mortgage agreement with them.

If you’re concerned about any change in your personal circumstances affecting your ability to move house, please speak to one of our mortgage specialists today for completely confidential and personalised advice based upon your current circumstances.

Borrowing more

Another aspect which might affect your ability - or desire - to port your mortgage is if you’re looking to purchase a more expensive property than your current mortgage covers. Assuming that your lender is willing to allow you to port your mortgage, the additional money to be borrowed is likely to be lent on a higher rate than the original mortgage, or you may even find yourself having to take out a second mortgage for the remainder. This will not only affect your credit rating but could also cause difficulties if the two mortgages end on different dates. In addition, you’re likely to incur further charges such as an arrangement fee for the additional money.

I can’t port, what do I do?

If you can’t, or don’t want to, port your mortgage, you’re left with two options as to how to proceed. Firstly, you could take out a new deal with your current lender to replace your existing mortgage, or you could take out a new mortgage with a different lender.

If you’re not able to do either of these things, you may end up being a ‘mortgage prisoner’. This means that you’re unable to get a new mortgage or port your existing deal due to the stricter affordability tests for mortgaging that have prevented many borrowers from moving their mortgages. Again, if you would like any more information on this, please get in touch with one of our mortgage advisors or check our Mortgage Calculator to quickly assess your ability for a new mortgage.

Replace your mortgage

If you are eligible for products with more attractive rates on mortgages than those on your current deal, it could be worth considering replacing your current mortgage, even if porting is an option for you.

If you do decide to replace rather than port your mortgage, you’ll need to consider any exit or early repayment fees on your existing mortgage which will need to be paid before you can take out the new one. Additional credit and affordability checks will also need to be met, so there’s no guarantee that you’ll be approved for a new mortgage, even if it is with the same lender.

Remortgaging or switching mortgage lenders

It may happen that between taking out your previous mortgage and being ready to move, other lenders release products which offer a more competitive rate. This may make switching lenders more attractive than staying with your original mortgage provider. This option may also assist if you’re looking to borrow more money on the new property than you had borrowed for the original as it means you can have everything under the same mortgage term.

Remember that when remortgaging or switching lenders, you’ll still need to pay any early redemption penalties or other fees associated with moving mortgage provider, so do make sure you check the terms of your current mortgage carefully and factor these into your calculations as to the best course of action before making any final decisions.

Fees

  • The main advantage to porting a mortgage rather than replacing or remortgaging is the avoidance of early redemption fees. These fees can be up to 5% of your outstanding mortgage amount, so on a large mortgage, this can really eat into your budget.
  • The majority of discounted mortgages in their first few years will have higher redemption fees attached to them. If you’ve had your current mortgage for some time, this fee may have become less significant, but it’s always a good idea to speak to your current provider before taking any steps towards taking out a new product.
  • In addition to any early redemption charges, you’ll also need to pay the normal fees associated with a mortgage application including a valuation fee, legal fees, stamp duty, application and administration fees from the lender and mortgage broker fees where applicable. In contrast, if you’re able to port your mortgage, you can minimise fees as some of these would have been paid when you initially took out the mortgage, and there will be no early redemption fees to pay.

Getting a new mortgage

If you do go ahead with a new mortgage, whether with your same lender or a new one, check the terms and conditions of the new mortgage carefully before signing any paperwork.

Checking that any new mortgage is portable is always a good idea, although as you’ve seen, it’s not always as straightforward as the paperwork might suggest and new applications will always need to be completed.

Why not speak with our team of expert mortgage advisers today to discuss what options are best suited to your circumstances and to get an idea as to the criteria you should be considering in reviewing a new mortgage or lender. Even if your personal circumstances have changed and you’re not sure whether you’ll be eligible for a new mortgage, our specialist team are happy to advise and assist with challenging and complex applications.

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