To port your mortgage is the act of transferring your existing mortgage deal to a different property.
Technically, when your home sells, your existing mortgage gets paid off from the proceeds of the sale. However porting your mortgage means you’ll take on a new deal with the same lender, rates and terms.
Why should you port your mortgage?
The main reason why you would want to port your mortgage is because you are on the best interest rate possible and you don’t want to give it up. Or you may feel that the current terms of your mortgage suit your needs. Porting your mortgage will offer you some consistency.
Another advantage of porting your mortgage is that you won’t have any early repayment fees. You will face significant penalties if you leave your current deal before the end of the term.
There can be drawbacks too of course. If you choose to port your mortgage without searching the market first, then you may actually be missing out on some better deals.
Will you definitely be able to port your mortgage?
When porting your mortgage to another property, it’s not quite as simple as a straight transfer. You’ll basically have to go through the application process all over again. This means that your mortgage provider will undertake affordability checks again and look at your credit history to make sure you are still eligible for the deal.
Here are some factors that may affect your eligibility to port your mortgage:
Your circumstances have changed
Perhaps your employment circumstances have changed since you took out your original mortgage, or you’ve additional childcare costs that are affecting your income and outgoings. If so it may mean that your options are slightly different this time around.
If your income has increased it may actually mean you are able to get more favourable terms, but on the flip side, if your income has reduced or you’ve defaulted on any credit, you may no longer meet the eligibility requirements to be able to port your mortgage.
The price of the new property
If you are downsizing to a cheaper property, porting your mortgage is likely to be straightforward as you aren’t applying to borrow any more money.
However, if you are looking to borrow more to move to a larger, more expensive property then you’ll need to ensure you can afford the additional capital.
The type of property you are buying
It’s often difficult to obtain a mortgage for a non-standard property so if you are moving to a more unique home, it may not be feasible to port your mortgage. This is because the lender sees non-standard properties as a greater risk.
This could include such properties as listed buildings, high rise apartments, ex-local authority homes or concrete and timber-framed buildings.
Your credit rating
If you have had any recent credit issues since applying for your current mortgage, a lender may not be able to consider your application to port your mortgage. Borrowers with poor credit are deemed a higher risk. If you are unable to port your mortgage, due to poor credit, then you may need to apply for a brand new mortgage.
However, it may be more difficult to find a lender that will approve you for a brand new mortgage. In this case, it may be worth seeking the help of a mortgage broker, who will be able to point you in the direction of the lenders that are most likely to accept you.
The above post does not constitute advice – financial, legal or otherwise. The information within this article is the author’s own opinion and do not necessarily reflect the views of SO Media or So Smart Money.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE