5 mins read
Some lenders will allow you to transfer your mortgage when you sell your home and buy another. This is a process called ‘porting’. ‘Porting’ means that your lender offers you the same rate and conditions of your current mortgage, but with the risk secured against a new property.
How does porting a mortgage work?
The first thing you need to do if you’re considering transferring your mortgage is find out whether your loan is actually portable. You should be able to find this out by looking at your original offer letter, or by contacting your lender.
Once you know you’re able to port your mortgage in theory, you’ll have to make an application to your lender. This is a very similar process to applying for a new mortgage offer. Your lender will undertake a credit check, look at your income, and undertake a valuation of the property that you want to buy (likely at your expense). You’ll also likely have to pay an ‘arrangement fee’ on application.
Even if your mortgage is technically portable, there’s no guarantee your application will be accepted. Your lender will want to evaluate whether their position will change in terms of risk, and checking to see if you can still afford your mortgage.
The Mortgage Market Review introduced new rules for mortgage lending in 2014, and this changed the affordability criteria for many lenders. This could mean that your lender may not port your mortgage, even if your circumstances haven’t changed.
Other things they may take into account in your application include: your age, changes in employment, and the type of property you want to move to. These factors all impact the risk a lender is taking on. For example, properties like high rise flats, listed buildings, and new-build homes are seen as higher risk, and a lender may be more reluctant to port your mortgage if you want to buy one of these.
On the other hand if you’ve kept up with your mortgage payments, and there isn’t a significant change in risk or value of the property you’re planning to buy, it’s likely your lender will accept your application. You’ll then receive an offer letter confirming the new arrangement.
Read more about how mortgages work.
Can I port my mortgage to a cheaper property?
Yes, if you have a portable mortgage, it is possible to transfer your loan to a cheaper property, but it adds a few extra complications.
Your lender will likely only let you move your mortgage to a new cheaper property if you keep the same loan to property value ratio (LTV). This is because a cheaper property provides less security against the risk of your loan. To keep the same LTV percentage you may have to repay part of your original loan to the lender, and an early repayment charge on this amount.
For example: If you took out a 75% LTV mortgage on a £100,000 property, and are downsizing to a property worth £80,000, porting your full mortgage would increase the LTV to over 90%. To keep the LTV rate at 75% you would only be able to port £60,000. This would mean you would need to repay the £15,000 difference to your lender before you move, and an early repayment charge for this £15,000.
Can I port my mortgage to a more expensive property?
Similarly to porting to a cheaper property, it is possible to transfer your mortgage to a more expensive property. However, the criteria is more difficult to fulfill.
If you’re close to the maximum amount your lender’s affordability criteria will allow, it’s likely they’ll be unwilling to lend you more. This could prevent you porting your mortgage to a more expensive property.
If you are able to borrow the extra amount needed for your new home, it is likely this loan will be subject to different conditions than your principal mortgage. You will need to borrow this extra bit on your lender’s currently available rates. This can also mean you’ll have two different end dates for your mortgage, which can make it more difficult to remortgage in the future.
However, if you’re able to cover the extra cost of your new home with cash savings you decrease the risk for your lender. A more valuable property is much better security. This can make you a more attractive prospect for a lender so you’ll have less chance of having your application declined.
Should I port my mortgage?
There’s no one-size-fits-all approach to deciding whether porting your mortgage is the best decision. It’s all down to whether it makes the most sense for you financially. In some instances porting can be the best option. But in others transferring your mortgage can actually end up costing more than switching to a new deal.
The best thing to do is to compare the fees and savings each option offers. This includes: the exit fees, early repayment charges, and valuation fees, that will be due in each scenario. Then compare the interest rate available on your current plan compared to those offered by other lenders.
If you’ve recently taken out a cheap fixed rate deal, or you’re moving to a cheaper property, it is likely to make financial sense to port your mortgage. But, if you don’t have long on your fixed rate, or are paying a standard variable rate of interest, it’s likely you’ll be able to find a cheaper mortgage deal out there. And, this might save you more money than the fees for leaving your current mortgage will cost.
If you’re unsure of the best option for you, talk to an independent mortgage broker. They will be able to provide advice tailored to your specific situation.
For more information on mortgages check out our handy guide.
Compare Local Estate Agents
See which agents will do the best job of selling your home.
How does shared ownership work when you sell?9 Jul 2020
Finding objective information about shared ownership properties can be difficult. Shared ownership is a fairly new form of home ownership in the UK, so most of the information out there is written either by those who hugely support the scheme, or those that don’t. Below we attempt to cut through all the confusion. We look at how selling a shared ownership house works - how it’s different from your usual home sale, and what fees are involved. ### What is shared ownership? Shared ownership is a scheme that tries to help those unable to afford a home to get a step up onto the property ladder. Buyers purchase a share in a property and then pay rent on the remaining share. This rent is usually at below market rates - somewhere around 2.75% of the share’s value - and goes to a designated housing association. This tends to end up...
Do I have to pay estate agents if I pull out of the sale?8 Jul 2020
Sometimes life doesn’t go to plan. A change of circumstances can have consequences for every facet of your life. If your position has changed - for whatever reason - you may find that you need to pull out of your property sale, or take your house off the market altogether. Below we look at your rights as a home seller, what happens if you pull out of a property sale, and what estate agents fees you’ll have to pay. ### What happens if you pull out of a house sale? What happens when you pull out of a house sale depends hugely on how far along in the process you are. The earlier in the house sale you are, the easier and cheaper it is to get out of it. ### I want to pull out of my house sale: before exchange If you decide you no longer want to...
Do estate agents make up viewings?7 Jul 2020
Estate agents have a pretty notorious reputation. They’re up there with politicians and marketers in opinion polls as one of the least trustworthy professions in the UK. One of the common myths of ‘estate agent tricks’ is that agents make up viewings - or hire professional house viewers. The idea behind this is that estate agents want to reassure their home seller that they are marketing their home effectively, so that a homeseller doesn’t switch to another agent. Because high street estate agents are paid once a house is sold, if a homeseller switches to another agency, the original agent loses their fee. But is there actually any basis to this myth? Do estate agents *really* make up visits by potential buyers? Below we look deeper into how to deal with estate agents when selling, what to expect from viewings, the legality of fake house visits, and what to do...