Mortgages are often seen as long-term financial commitments, and when circumstances change you may be looking to make a move while preserving your existing mortgage agreement. Porting a mortgage is a great way to do this, allowing you to keep the terms of the same loan and transfer it to your new home with ease.

Mortgage porting is a fairly straightforward process that involves the same paperwork and processes as taking out a new mortgage. The main difference is that it allows you to keep the terms of your existing mortgage, such as its interest rate and repayment period, so you don’t have to start from scratch.

How does porting a mortgage work?

If you move house and wish to keep your current deal, porting is the way forward. By doing so, you will avoid any Early Repayment Charges (ERCs) that come with taking out a new mortgage for your next home. So if you're tied into your current mortgage agreement - porting could be the ideal solution for a hassle-free transition!

When porting your mortgage, you’ll need to provide evidence that you can afford the new property and support your application with a valuation of the new property. Once approved, your current mortgage will be transferred to the new property and you can begin making repayments on the same terms as before.

One of the main advantages of porting your mortgage is that it can save you money in the long run. Many new mortgages have higher interest rates than existing ones and additional fees that must be paid for approval, so porting could potentially save you thousands of pounds over the lifetime of the mortgage.

Ultimately, porting a mortgage can be a great way to save money and keep the same favourable terms when you move to a new property. However, it’s important to do your research and speak to a mortgage specialist before making any decisions. That way, you can ensure you make the best choice for your individual circumstances.

How to port your existing mortgage

It is important to note that it is the deal/rate that is ‘portable', not the loan. You will have to reapply. The loan-to-value (LTV) of your new property, any changes in lender's criteria and any changes in your personal circumstances since you first took out your mortgage will have an effect on your eligibility for the deal. Your financial circumstances and household income will still be checked.

Moving your mortgage from your current property to a new property is not always straightforward. Your current lender will assess the loan again, and they'll need evidence that everything adds up financially and fits their current lending criteria.

Struggling to port your mortgage? Here are some of the most common reasons why it may not be possible:

• You've had a change in circumstance: A change in circumstance can impact your porting application being accepted, ie change in income or more outgoings or even a change of employment status.
• Your credit score has lowered: A lower credit score can cause your application to be declined as you no longer meet the lender's internal credit scoring system. This can be for reasons like missed payments or higher commitments.
• The new property type: Lenders have a set list of criteria for properties they will lend on. Your new property may not meet this criteria, ie non standard construction.
• Property value lower: This could potentially reduce the loan amount you can receive, or even stop you from being able to secure the mortgage deal.

Existing Mortgage Deal

You will need to speak to your existing lender or mortgage broker to find out if you can port your current mortgage to a new property. If your current mortgage deal has still got some time left to run and you are looking to move house, you may incur early repayment charges if you switch your deal over before a certain date.

If you are looking to move to a more expensive property and you aren't able to make up the difference yourself, you may be able to take out additional borrowing, however, not every mortgage provider will allow this, so it is always best to clarify with your mortgage lender first.

Some lenders will allow you to do this and this is called a top up mortgage, the available deals may not be as favourable, and the separate products will have different end dates which means you will have to keep track of your mortgage end dates when looking to remortgage.

Porting your mortgage - advantages and disadvantages

While porting your mortgage can be beneficial, it does come with certain drawbacks.

Advantages

• No need to pay your early repayment charge - This is because you will be keeping the same terms, with the same lender

• Lower interest rates - If your existing deal is at a lower interest rate, you will carry on paying that low rate at your new property.

Disadvantages

• Fees -When you opt for porting, it's important to note that there may be some additional costs associated with the process, including valuation fees, an arrangement fee and legal fees 

• Additional funds - If the new property you're looking to purchase is more costly than your current one, then any extra money that you need may come with a different interest rate. Therefore, this means you will have two parts to your mortgages on different products, one part will be your existing mortgage and the other will be a new deal- each with its own varying rates and end dates.

• Higher interest rate - By staying with your existing lender, you could be missing out on better terms and interest rates if the mortgage was taken out when rates were less favourable. If more advantageous deals are available elsewhere, it might be wiser to consider remortgaging instead of porting the mortgage.

What if I can't port my current Mortgage Deal?

If you don't have a portable mortgage it is always best to stay in the property until your deal ends and move afterwards. If this is not an option you may need to pay the early repayment charges and exit fees and apply for a new mortgage for the property.

If you need more information regarding porting or remortgaging elsewhere then LTC Mortgages can help. We can help you with the porting process or help you compare mortgages if porting isn't an option, we will help you secure the best deal for your circumstances. Speak to us today at 0151 662 0188 or email [email protected].