Porting a mortgage means you keep the same product, with the same provider and the same rates, but transfer your account over to a new property.
This option is highly preferable if you have a very competitive fixed rate that you could not replicate in current market conditions, particularly if you have a year or more left to run at a below-average interest charge.
It may also be beneficial to port a mortgage if your tracker rate is good or if you have negotiated terms on a non-standard mortgage and would find it difficult – if not impossible – to get a similar mortgage agreement.
Today we will examine how porting a mortgage works, what happens if your circumstances have changed, and the occasions in which porting your mortgage is a viable option.
Mortgage Porting: The Basics
Porting a mortgage simply means that you transfer your current mortgage rate and all the associated terms and conditions to a new property when you move.
There are numerous benefits, including avoiding any potential early repayment fees you may have incurred if you remortgaged to a different lender.
Most mortgages can be ported, although you must check your agreement terms before making any firm plans.
There are, however, a few factors to be aware of before you decide whether you can port your mortgage and if it is, in fact, the best route.
Advantages of Porting a Mortgage
The benefits of porting a mortgage include the following:
- Not paying exit fees or early settlement charges because you retain the same terms without changing your mortgage lender.
- Keeping favourably low-interest rates locked in for the duration of your mortgage fixed-rate term. That is particularly beneficial when mortgage rates have increased rapidly and dramatically.
- Switching a mortgage to a new property without the time or hassle of going through the assessment process, since your lender already has most of the information they require.
Of course, you would still need to provide a verified valuation of the new property, but a lot of the red tape would be unnecessary if you port a mortgage product without switching providers.
Possible Downsides to Mortgage Porting
There are some caveats and reasons why porting your mortgage may not necessarily be your ideal option.
- There may be better terms or rates available elsewhere, so sticking with one lender could mean you miss out on other, more cost-effective remortgaging products.
- Porting a mortgage still incurs fees relating to legal work, valuations, transfer charges and arrangement costs.
- If you want to purchase a home worth significantly more than your current mortgage value, you will likely pay a different rate for any additional borrowing.
You may be able to port a mortgage for a more expensive home, but the result is like having two different mortgage products, each with varying terms, repayment costs and end dates.
It could be worthwhile to avoid losing a competitive fixed interest rate, but it might create complexities if you decide to remortgage with a different lender.
As always, we recommend you contact Think Plutus for professional advice to ascertain the potentially suitable products and weigh up the pros, cons, and repayment costs before proceeding.
The Practicalities of Mortgage Porting
If you want to sell your property and buy a new residence, you will still need to submit a mortgage application because although your repayment rates and terms will travel with you, it still means applying for a new mortgage agreement.
Once the lender has been through the normal eligibility checks and assessments, they will be able to confirm whether they can offer to port your mortgage over to a new property.
Mortgage lenders will need to:
- Assess your earnings, outgoings and personal circumstances to check whether they match their lending policies – note that these may have changed since your original application if your income or other responsibilities have altered.
- Confirm whether you need to borrow a higher value or wish to port a mortgage of the same borrowing level.
- Organise a valuation survey of the new residence to ensure they have an accurate current market value.
When you get the green light, you complete the purchase transaction and repay the old mortgage simultaneously, switching from one to the other immediately.
There are scenarios where porting in this way is not possible. In this case, you may still be able to port your mortgage, but you usually have a deadline of between 30 and 90 days to complete the purchase after repaying the previous mortgage.
Credit Checks and Mortgage Porting
Every mortgage application requires some form of credit check, which is part of a lender’s due diligence process to ensure they are not lending irresponsibly, or to an applicant who will be unable to keep up with the repayments.
Lenders may request additional documents, whether or not they have had them before, such as bank statements, proof of earnings and photo ID.
Applicants who have experienced a significant change to their credit rating may require specialist advice, but your credit score should not make a substantial difference to your application status.
If your credit score is not perfect, you may find that your lender requires a higher deposit or offers a lower maximum LTV, but there are situations where they decline a mortgage porting request due to credit issues.
The caveat is that if your credit score has dropped or you have had recent issues with your credit, you may still be able to port your mortgage if you buy a new home with a similar or lower value.
Lenders will be more likely to accept mortgage porting applications where you need to borrow less, or no more, than your existing agreement.
Factors to Consider Before Deciding Whether to Port a Mortgage
Mortgage providers have multiple criteria, policies and lending rules, so before you apply to port your mortgage, it is worth having an overview of the related factors that might have a bearing on whether they approve the application.
Non-standard properties (think thatched cottages or timber frame homes) are generally harder to mortgage or remortgage. The lender needs to assess the risk that the property may be harder to sell in a repossession scenario.
Specialists or flexible lenders can usually be more adaptable, although you may need to provide a higher deposit or borrow to a lower LTV.
The lender may need to repeat an income assessment, as lending criteria change, and are more likely to have been updated if you originally took out your mortgage a few years ago.
Lending policies dictate how much you can borrow, considering your annual income, other debts and regular outgoings.
Most mortgage lenders calculate affordability based on roughly three to 4.5 times your yearly earnings, so if you earn a £30,000 salary, you might be able to borrow up to around £135,000 and double that if you are applying with a joint applicant.
If you need to port a mortgage of a higher income multiple, we recommend getting in touch for more advice about which lenders will consider this type of application.
Employed applicants are typically easier because it is clear how much you will earn per month and year. Lenders can review your employment history, length of employment and contract type.
Newly employed, self-employed and non-contracted workers can find that the assessment process is more complex. A mortgage provider will want to see at least two or three years of income records and tax returns to estimate your average annual income.
It may be more difficult to port a mortgage if your employment status is considered a higher risk, such as being newly self-employed or within a probationary employment period.
Mortgage applicants close to, or beyond retirement often use specialist lenders, as banks tend to have strict rules about lending to borrowers claiming a pension, or who will be over retirement age at the end of the term.
That said, you should be able to port a mortgage, especially if the term end is not too far away or you have paid off the bulk of your mortgage borrowing.
Lenders can have upper age caps of around 75, although others do not have specific requirements, provided you can afford to maintain the repayments.
Porting a Mortgage to a Higher Value Property
It is possible to port a mortgage to a new home and borrow an extra sum to cover the purchase cost if your new property is worth more. However, you may not be able to add the additional debt to your existing product at the same interest rate.
Instead, you might be able to port your current product and then take out an additional second loan with a different end date and interest rate for the balance.
Porting a Mortgage to a Lower Value Property
Porting a mortgage is also possible if you want to downsize or relocate to an area where a similarly sized property costs less.
Your mortgage lender will still need to see a professional valuation, although you may not need to pay arrangement fees and will not often incur early repayment charges.
The only difference would be if you wish to port a mortgage to a lower-valued property while borrowing the same value – the risk is perceived as higher since the property may not offer sufficient security against the loan.
- You own a home worth £200,000 with a mortgage balance of £150,000 or 75% LTV.
- You move to a new home costing £175,000 but want to keep the loan balance of £150,000 without repaying any debt from the sale proceeds.
- Your lender is considering porting a mortgage with a higher LTV of 85%, which may be outside their lending criteria – or incur a higher interest rate.
Most lenders prefer applicants to repay some of the mortgage from the capital raised from the sale, and port the mortgage product to a new home with a lower balance, although that is not always a deal breaker.
Professional Mortgage Porting Support
There are some situations where we might advise against porting your mortgage. Possible reasons could include:
- Being able to exit your current mortgage without early settlement charges.
- Having better value mortgage products or more attractive interest rates available.
Please get in touch if you would like to run through the pros and cons of mortgage porting and the best solutions for your circumstances.
Think Plutus is a private, independent and whole-of-market mortgage broker, working with a vast network of lenders, including specialist mortgage providers who only offer products through an approved broker.
We can steer you through comparable options, discuss your requirements, and suggest the best solutions to match your preferences.