If moving home, you may be able take your current mortgage with you by ‘porting your mortgage’.
Despite the gloom, official stats show that the housing market is still pretty buoyant.
For many people, they assume that if they buy a new property, they will also need to search for a new mortgage. But that isn’t always the case. As ever with finance, it all depends on personal circumstances and the lender.
Porting your mortgage
When moving home, you might have the option to port your mortgage. That means you can transfer the deal you currently have and take it to your new property. It includes the interest rates and other terms of the mortgage.
Rather than taking out a new mortgage, the money raised from the sale of your current property pays off the existing mortgage. You then take out a new mortgage on the same terms with your existing provider to cover the cost of buying your new property.
What happens to my terms?
The terms of your mortgage will remain the same if you port it. It means your interest rate, fixed-rate period and fees remain the same. Some lenders may be able to change some terms – for example extending it from 25 to 30 years.
While lenders may say their mortgages can be ported to a new property, there’s no guarantee. They all have their own rules, so don’t assume you can port your mortgage.
How do I port my mortgage?
Check the terms and conditions first. If The Mortgage Dog is your broker, we can help you clarify those. If you’ve used another broker, they should be able to help.
Although you’re not applying for a new mortgage, you still have to apply to port your mortgage. Your lender then carries out checks before making their decision. For example, they will check your credit score, as your circumstances may have changed.
Lenders will also value your new property to check that it meets it terms.
Should you port your mortgage?
If your lender is happy for you to do it, should you port your mortgage? Well, that depends on several factors. Here are the pros and cons of porting your mortgage.
- Keeping your current rate. While mortgage interest rates have stayed pretty competitive, they have risen. So if your current mortgage allows you to keep a lower rate, then that’s a big positive.
- No exit fees. When you buy a new property and need a mortgage, you have to pay early repayment charges. Porting your mortgage means you don’t have to pay the fees as you’re keeping the same terms.
- Missing out on competitive rates. While rates have risen, it might still be possible to get a better rate with a new mortgage. That means you could miss out on a reduced monthly mortgage bill.
- Complications on higher value properties. If the property you’re buying is more expensive and you need to borrow more, it can lead to complications. Additional lending might be on less favourable terms than if you shopped around or used a broker.
What should I do?
If you want to know more about porting your mortgage and whether it works for you, contact one of our team today.