Porting a mortgage explained

Porting a mortgage means transferring your existing mortgage to another property. This allows you to move home while essentially keeping the same mortgage deal, which could save a lot in fees and legal costs.

However, though a lot of mortgage deals are portable, not all will be – and even if yours is, there’s no guarantee that you’ll actually be able to port it, as it all depends on your circumstances and the terms of your particular deal. Here we take a closer look at porting a mortgage to see how it could work for you.

How does porting a mortgage work?

Porting a mortgage works by transferring your mortgage deal to a new property, including the current interest rate and all relevant features. However, it’s important to note that it’s the deal that’s portable, not the loan itself, so you’ll still have to re-apply for the mortgage.

If approved, you’ll keep the same mortgage rate and everything will stay the same as it was before, but because you’re technically applying for a new mortgage, there’s no guarantee, particularly if your circumstances have changed or the new property is vastly different to your current one.

Porting a mortgage to a cheaper property

If you’re asking to borrow less money it may seem like porting would be a simple process, but while it’s certainly possible, you’ll still need to complete an affordability assessment.

Early repayment charges could also be an issue if you’re not porting the full amount, and note too that porting means you’ll keep your current interest rate, so even if you’re technically able to move down a loan-to-value (LTV) bracket, it likely wouldn’t result in a cheaper deal.

This means it could be worth seeing if remortgaging to a completely new product or even new lender could be more suitable, particularly if there are early repayment charges to pay.

If you’re unsure of the right course of action, it’s worth speaking to a broker who’ll be able to help.

Porting a mortgage to a more expensive property

This will involve borrowing more money, but you won’t be able to add that amount to your existing mortgage. Instead, you’ll have to apply for a new, separate mortgage to cover the difference, which will usually be at a different rate. This could mean you then have two mortgages – the mortgage you port, plus another mortgage to cover the extra amount.

For example, let’s say you have a current mortgage balance of £150,000 on a £250,000 property, giving you equity of £100,000. You’re moving to a new property worth £300,000, which means you’ll need an additional mortgage of £50,000 to cover the cost (current mortgage of £150,000 + new mortgage of £50,000 = £200,000 total mortgage, with the equity of £100,000 completing the purchase).

However, as with all mortgage applications this will be subject to stringent checks to ensure you can afford the higher mortgage costs. Make sure to seek advice ahead of time to help you crunch the numbers.

Can I port my mortgage?

This will depend on the terms of your mortgage, as while a lot of mortgages are portable, not all of them are. If you’re unsure, you can ask your lender for clarification.

However, you should bear in mind that even if your mortgage is portable, you’re not guaranteed to be able to port it. Approval will depend on a whole range of factors such as the LTV you’re moving to, whether your circumstances or financial situation have changed, affordability checks and the provider’s general lending criteria.

A few reasons that could mean you’re not able to port your mortgage include:

• If your household income has changed, such as if you’ve recently been made redundant or have gone self-employed.
• The provider won’t lend on the house you’re moving to, such as if it’s a property of unusual construction.
• If you’ve taken on more debt since your initial mortgage application.
• Your credit score has worsened due to missed payments (make sure to check your score before applying).
• If you need to borrow more money but don’t pass affordability checks.

What if my mortgage isn’t portable?

Your first step is to speak to the lender to find out why. If you don’t agree with the decision you could ask them to review it, or if you think you’ve been treated unfairly you can contact the Financial Ombudsman Service.

Alternatively, if it’s a case of your circumstances have changed and/or you don’t meet affordability criteria, could you do anything to improve your situation, such as paying down debt, improving your credit score or increasing your income?

If not, your other option could be remortgaging to a brand new deal with a different lender, though bear in mind that this will likely result in exit fees and an early repayment charge (ERC) to pay off your current mortgage early, as well as the additional costs of taking out a new mortgage.

However, bear in mind that you’ll still need to meet the criteria of the new lender, so switching may not even be possible. In that case your other option is to simply stay in your current home, and wait until your circumstances mean you’ll be eligible for porting or switching mortgage lender.

Is it a good idea to port your mortgage?

If mortgage rates have increased since you took out your initial deal and it would be more expensive to remortgage to a new one, then porting could be a great option. It could also be beneficial if you’re still in a fixed term and would have to pay a hefty early repayment charge to switch.

However, in some cases moving to a completely new mortgage deal would be preferable, such as if you could get a much cheaper rate elsewhere, even after all additional costs have been taken into account.

Ultimately the best way to work out if it’s a good idea to port your mortgage is to weigh up the costs involved in each option. You could do this yourself, but it can be useful to speak to a broker who can help.

How to port your mortgage

If you’ve decided that porting your mortgage is the best option, here are the steps to take:

1. Get prepared. You’ll need to properly prepare to port your mortgage, in the same way you’d need to if you were applying for a brand new deal. This means you should check your credit score to ensure there won’t be any nasty surprises, and start collating the paperwork you’ll need for your application (such as bank statements, payslips, etc). It’s also worth familiarising yourself with the income that can be used for a mortgage to be confident you’ll pass the affordability checks.
2. If you’re asking to borrow more money, make sure you can afford it – and that you’re likely to be accepted. Use our mortgage repayment and borrowing calculators to help work things out.
3. Contact your lender. You’ll need to apply for a Decision in Principle as you would for any other mortgage. The lender will run through the usual affordability and credit checks and will conduct a property valuation.
4. Wait for the application to be approved.
5. Complete the house purchase and pay off your old mortgage. Normally this would be on the same day, but most lenders will allow a “grace period” after redeeming the old mortgage for you to complete on the new one.

How long does porting a mortgage take?

This can vary depending on the lender and your circumstances, but it will typically take between one and three months to complete a mortgage port. If it’s a simple case it should be fairly quick, but if you’re asking to borrow more money (and will therefore need a second mortgage) or if there are issues with the property it can take longer.

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