One thing no one ever tells you is that moving house always comes with a huge to-do list of financial decisions that should include figuring out what happens with your existing mortgage. If you’re still within an initial deal period – like a fixed rate – you might be worried about facing hefty Early Repayment Charges (ERCs) if you chose to move before the deal ends. This is where understanding more about porting a mortgage becomes relevant.

This guide will explain exactly what porting a mortgage means, how the process typically works in the UK, the potential benefits and pitfalls and what you need to consider before deciding if it’s the right option for your move.

 

 

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Understanding more about porting a mortgage

At its most basic level, porting a mortgage is the process of transferring your current mortgage deal – including its existing interest rate terms and conditions – from the property you are selling to the new property you are buying.

Think of it like taking your current mortgage product with you when you move.

Why consider porting a mortgage?

There are a few reasons why homeowners might want to port their mortgage:

  • To avoid early repayment charges: If you are on an attractive fixed-rate or tracker deal and want to move house before the initial deal period ends, porting might mean you can avoid paying potentially substantial ERCs.
  • To keep a good deal: when current mortgage interest rates on the market are higher than the rate on your existing deal, porting allows you to hold onto that more favourable rate for the remainder of its term.
  • For simplicity: For some people, it can feel simpler to stick with their current lender and existing mortgage product rather than starting a brand new application process with a different lender.

How does porting a mortgage work

The process of porting a mortgage isn’t just a straightforward administrative switch; it involves several steps and a re-evaluation by your lender.

Step 1: Inform your lender

The very first step is to contact your current mortgage lender as soon as you are considering a move. Tell them you want to explore porting your existing mortgage to a new property. They will explain their specific process and criteria.

Step 2: A full reassessment (known as Underwriting)

This is a crucial point: even though you have an existing mortgage with them, the lender will need to reassess your eligibility for the mortgage on the new property. This typically involves a new affordability check based on your current income and outgoings, a new credit and a valuation of the new property to ensure it’s suitable security for the loan.

Essentially porting a mortgage means you are reapplying for your mortgage just with the aim of keeping your existing product terms.

What if you need to borrow more (or less)?

If your new home is more expensive than your current one, you will likely need to apply for additional borrowing (a ‘top-up’ loan) from your current lender. This extra amount will usually be on one of their current mortgage products and interest rates meaning you could end up with two components to your mortgage at different rates.

In contrast, if you are downsizing and your new mortgage amount is less than your current one, you might still have to pay ERCs on the portion of the loan you are not porting. Some lenders have specific rules about this so it’s vital to check before proceeding.

In addition, it is important to remember that, for porting to work smoothly, the sale of your current property and the purchase of your new one need to complete on the same day or very close together. Gaps can sometimes be accommodated by lenders but this needs to be discussed and agreed upon.

Five key factors to think about before porting a mortgage

Before deciding that porting a mortgage is the best option for you, it’s important to weigh up several factors:

1. Is porting always possible?

No. As mentioned it is entirely at your lender’s discretion. If your financial circumstances have changed for the worse (e.g. lower income, higher debts or poor credit) or if the new property doesn’t meet their lending criteria, they can decline your porting application.

2. Are there fees involved?

Yes, even when porting you may still need to pay certain fees such as a new property valuation fee and potentially an administration or ‘porting’ fee charged by the lender.

3. What if your circumstances have changed negatively

If your income has decreased, your outgoings have significantly increased or your credit score has dropped since you took out your original mortgage you might not meet the lender’s current affordability or lending criteria to port the mortgage successfully.

4. Is your new property acceptable to the lender?

The lender must be satisfied that the new property you are buying is good security for the loan. Issues with the property type construction or condition could lead to a porting application being declined.

5. Comparing porting vs. a new mortgage deal

It’s essential to do the maths. Calculate the cost of any ERCs if you were to leave your current deal. Then compare the overall cost of porting (including any fees and potentially higher rates on additional borrowing) with the cost of taking out a completely new mortgage with a different lender who might offer a better overall package for your new circumstances. This can be complex.

When might porting a mortgage be a good idea?

Porting often makes financial sense when:

  • You are on a very competitive low interest rate that is significantly better than current market rates
  • The Early Repayment Charges for leaving your current mortgage deal are very high
  • Your personal and financial circumstances haven’t changed negatively since your original application.
  • You are moving to a property of similar or slightly higher value and may not need to borrow a large additional sum

Getting advice on porting a mortgage

Given the complexities involved, particularly if you need to borrow more or less or if current market rates are very different from your existing deal, seeking professional mortgage advice is highly recommended when thinking about porting a mortgage.

An advisor can help you compare the true costs and benefits of porting versus remortgaging to a new deal. This can help provide clarity and ensure you make the most financially sound decision for your move.

OneDome is here to help

Choosing a mortgage is complex but OneDome is here to help. If you have any questions about the specifics of mortgages, the wider mortgage process or want tailored advice on the different types of mortgages that suit your situation you can:

Important: Your home may be repossessed if you do not keep up repayments on your mortgage.