If you have a mortgage and are looking to move home, you'll need to sell your current home and use the revenue to pay off your current mortgage. Then you can take out a new mortgage on your new property.
You'd have to reapply and secure a new rate, which is not ideal if your current interest rate is low.
You could 'port' your mortgage to your next property if your lender allows it, enabling you to keep your current mortgage terms and potentially avoid some exit fees.
What does porting a mortgage involve?
Porting a mortgage means to transfer your existing mortgage deal to a new mortgage. You are transferring the terms of the mortgage, not the mortgage loan itself.
You take out a mortgage from the same lender on a new property and retain the terms of your initial mortgage, such as the interest rate and the repayment term.
You pay off your existing mortgage with the income from selling your current home, and you receive your equity in cash which can be used as a deposit.
Your equity is how much of your mortgage loan you’ve already paid off.
Some lenders may require an Early Repayment Charge (ERC) on your existing mortgage when you port, usually 1% to 5% of how much you still owe, and possibly an exit fee of a few hundred pounds.
One of the benefits to porting is that some lenders don't charge an ERC or an exit fee as you aren't breaking your current deal. This is not guaranteed, and you should check your agreement or ask your lender if you are unsure.
Can I port my mortgage?
There is no guarantee your lender will allow you to port your mortgage as not all agreements allow porting. You should ask your lender if you can port your mortgage before proceeding.
Your new mortgage must be with your current lender to port your mortgage terms.
If you are happy with your current mortgage deal, then it’s worth looking into porting as it enables you to retain your current rate with your current lender.
If your current terms aren't great, then it might be better to explore your options with different lenders rather than porting your mortgage.
You could ask your current lender what rate you can expect to be offered on the new property, and decide if you’d like to port then.
Different porting scenarios
After you've sold your current property and your mortgage is paid off, the remaining money, your equity, can be used as a deposit for your next home.
The value of the new property in comparison to the loan you have for your current property has a big impact on what porting will look like for you.
The simplest port is when the new property is the same value as your current property. That means you won't have to borrow any more than you did initially.
If the property you're moving into is worth more than your current property, you'll need to borrow more. You can port your existing mortgage over, but you'll need an additional loan to cover the rest of the property.
If the property you are looking to move into is worth less than your current property, you'll be liable to repay the difference when you port your mortgage.
What if I can't port my mortgage?
Not all mortgages can be ported, and your new mortgage has to be with your current lender if you intend to port. If you’re interested in exploring your options with a different lender, porting is not an option.
The easiest way to find out if porting is an option for you is to ask your lender directly. It may be that your mortgage agreement doesn't allow you to port, or that your circumstances have changed and you no longer qualify for the deal you currently have.
In the event you can't port your mortgage, you'll have to apply for a new mortgage with new terms. Without porting, there is no guarantee you can secure the same terms you currently have.
If you can't port then you need to decide what you want to do. You could stay in your current property until your mortgage is paid off, or you could start exploring what your mortgage options are with other lenders.
Our expert partner Embrace Financial Services search deals from over 70 lenders to find the right deal to suit you. Ther are offering a no-obligation mortgage appointment, book yours today.
If you're looking to move home, the first step is to get a valuation for your current property. Book a free property valuation today and our local sales experts will be in touch.
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YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Your initial mortgage appointment is without obligation. Embrace Financial Services normally charge a fee for their services; however, it is payable only on the submission of your mortgage application. The fee will depend on your circumstances but the standard fee is £549. Complex cases usually attract a higher fee. Embrace Financial Services will discuss and agree the fee with you prior to submitting any mortgage application.
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