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What is Porting a Mortgage?

Katie Cullen
Written by Katie Cullen
12th January 2017 (Last updated on Monday 13th November 2017)

If you want to move home, you need to decide whether to take your existing mortgage (mortgage porting) with you or get a new mortgage. A portable mortgage is a mortgage that allows the borrower to take early repayment charges and transfer their mortgage balance to a new property and with the same lender.

So how do you go about it?

This article will cover the following points

Applying to port a mortgage Do you need to borrow more? When can you not move a mortgage? Finding a better mortgage Early repayment charges Exit fees

Applying to port a mortgage

The first step to moving your mortgage is to speak to your lender. You should involve your mortgage provider as soon as you think of moving house, to see what they advise. They will inform you of any fees that may apply, and will indicate whether you need to increase your loan, meaning you may need to borrow more.

Do you need to borrow more?

Are you moving to a more expensive property? It’s likely you will need to borrow more, and your lender might not allow this, if you have borrowed near the maximum amount they allow.

If you can borrow more, it’s likely they will insist you put the additional borrowing on a different product.

Regardless if you can afford the repayments, new rules introduced in April 2014 mean it is much harder to get a mortgage.

When you reapply, there will be much closer scrutiny of your finances and must provide evidence of your income; your lender will consider and any outgoings like gym memberships or child care. Your credit rating will also be assessed, whether you are getting a new mortgage or simply transferring your current one.

Even if you haven’t increased your debt or outgoings and made all your payments on time, your lender still isn’t obliged to allow mortgage porting.

When can you not move a mortgage?

Porting is a flexible feature, but there are no guarantees you will be able to do it. You may not qualify for many reasons; for example, your circumstances may have changed since you got your mortgage, or you are now self-employed, earn less, have more debt or outgoings. All these factors make it unlikely you will be able to port your mortgage.

If you are unable to transport your current mortgage to a new property leaves you with three options:

  • Pay early redemption fees.
  • Move lenders.
  • Stay in your current property.

Keep in mind even if your circumstances haven’t changed, the criteria to qualify may have, which you may not fill.

If you can’t take your mortgage with you when you move you can look for a new one.

Finding a better mortgage

It’s easier to save money and find a better deal if your current mortgage is penalty-free. Mortgages for people moving home are increasingly more competitive, with rates starting at around 3% and fixed rates slightly higher. When looking for a better deal, you should consider:

  • Arrangement fees – the amount you pay in arranging the mortgage could offset the savings you are looking to make from your previous mortgage
  • The mortgage term – you should be aware of whether or not you will be paying off your mortgage for longer than you would have with your previous mortgage
  • Penalties – like your current mortgage, you should be aware of any penalties that come with leaving your mortgage early.

Early repayment charges

When transferring your mortgage, you may incur some costs, particularly if you are within your introductory period of your mortgage, usually a two-year fix, and repay the loan sooner than expected, you should pay charges to cover the cost. The charges are usually 1% to 5% of the outstanding debt, depending on how long is left of the introductory period.

When lenders set up loans, it is expected that the customer will keep the loan for the amount of time that was specified. If some or all the loan is repaid earlier than expected, there is a cost to the lenders, so the early repayment charges cover that cost.

Exit fees

Exit fees are also known as ‘’deeds fee’’ or a ‘’final fee’’. When you pay off almost every mortgage, you must pay this fee which is usually a few hundred pounds.

Ultimately, before you make any decisions, you need to do your research and remember to carefully weigh up the cost of keeping your current deal against the cost of taking a new deal, and be sure to consider the additional exit fees previously mentioned.