Porting your mortgage

Porting your mortgage – Can you take your mortgage with you when you move home?

If you’re thinking about moving but already have a mortgage, you might be wondering whether you can transfer it to your new property. This process, known as ‘porting’ your mortgage, can be an option for many homeowners.

Below, we’ll break down what mortgage porting is, its benefits, and what to consider before making a decision, with insights from CARA Mortgage Services.

What is mortgage porting?

Porting your mortgage, or more accurately, porting your mortgage product, means transferring your existing mortgage deal to a new property when you move. This can be useful if you’re still within the initial product term of your current mortgage and want to avoid early repayment charges (penalties) for early repayment. However, porting isn’t always straightforward, and lenders will still fully assess your application as you are technically taking out an entirely new mortgage.

The two types of porting:

1. Simultaneous porting: This refers to moving your existing product onto your new mortgage. For this to work, the sale of your current home and the completion of your new purchase must happen on the same day. If your sale is completed before your purchase, you may have to pay Early Repayment Charges (ERCs) and could lose the option to keep your existing rate.
2. Non-simultaneous porting: In cases where the sale of your current home is completed before your new purchase (e.g., moving into a new-build with a long completion date), some lenders may refund the ERCs if you complete on a new mortgage with them within a set timeframe, usually 3–6 months. Each lender has different criteria, and in most cases, you will need to choose from current rates rather than keeping your existing rate.

Benefits of porting your mortgage

There are several reasons why porting your mortgage might be a smart financial move:

• Avoid early repayment charges (ERCs): If your current mortgage deal includes significant ERCs, porting can help you avoid these costs.
• Retain a competitive interest rate: If your current mortgage has a favourable rate that is no longer available, porting allows you to keep it instead of switching to a potentially higher rate.

However, it’s essential to weigh these advantages against potential fees and eligibility requirements. Consulting a mortgage advisor can help determine if porting or switching to a new mortgage is the better financial choice.

How does mortgage porting work?

Porting isn’t as simple as updating your mortgage paperwork to reflect your new address. You’ll need to go through a new application process, even if your mortgage amount and term remain the same. Here’s what to expect:

1. Reassessment by your lender: Your lender will re-evaluate your financial situation, including your income, expenses, and creditworthiness.
2. Property valuation: The lender will need to see a valid Home Report or conduct a valuation of the new property to ensure it meets their lending criteria.
3. Approval process: If approved, and assuming you are borrowing the same amount of money, your existing mortgage rate and terms will transfer to your new home.

Porting and additional borrowing

If you’re moving to a more expensive property and need to borrow extra funds, your lender may allow you to take out additional borrowing. However, this additional amount will be based on the current products available and may be subject to different terms and interest rates. This usually results in your mortgage being split into two different parts with separate interest rates and end dates.

To simplify future remortgaging, try to align the new borrowing with your existing mortgage term. However, in many cases, there may still be a significant gap between the two end dates.

What if your lender declines your porting request?

Not all porting applications are approved. If your lender refuses to port your mortgage, you’ll need to consider your options:

• Pay the early repayment charges: If the cost of ERCs is reasonable, switching to a new lender might be a better long-term financial decision.
• Stay with your lender: If switching would be too expensive, it might be best to wait until your current deal ends before moving forward with a new mortgage.

Final considerations

Before making any decisions, carefully assess your financial situation and compare the costs of porting versus switching to a new mortgage. Seeking professional mortgage advice can help you determine the best course of action based on your circumstances.

Important: Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Content provided by TSPC is for informational purposes only. Seek independent professional advice before making financial decisions related to property purchases and mortgages.