A question frequently asked by homeowners wanting to move up the housing ladder and buy a new home is whether they can take their existing mortgage with them or if they need to start all over again.
The good news is that it is generally quite possible, and often likely to be advantageous, to take your mortgage with you when moving house – and the process is called porting.
Porting is the process by which you transfer your existing mortgage to a new house you are buying.
As the Money Saving Expert points out, this flexibility in the way you use your mortgage may be very welcome, but it is by no means guaranteed. Many lenders offer the flexibility because, of course, they want to keep your business – and it may provide you with the chance to retain favourable mortgage terms.
If you satisfy the conditions imposed by your lender concerning the porting of your mortgage, you can keep the product with which you are satisfied and, invariably, continue to pay at a more favourable rate of interest than might otherwise be available.
Simply taking your mortgage with you – “porting” it saves you the cost of arranging an alternative mortgage.
What is involved?
If you are moving home, it follows that you are borrowing against a different property than the one in which you currently live and for which your mortgage was initially granted.
If your mortgage deal allows the flexibility of porting, you effectively need to reapply for the loan on the new property you want to buy. If you are moving up the housing ladder, that is likely to involve borrowing more money by increasing the size of your mortgage.
In many cases, therefore, the process of porting and reapplying for your existing mortgage may be as simple as that outlined by the website The Advisory:
- the loan is against a different property, so it must be valued by the lender – and you’ll need to pay the valuation fee;
- since you are reapplying for the mortgage, the affordability of the loan and your ability to make the monthly repayments needs to be reassessed, although the portable mortgage gives you the same terms of borrowing at the same rate of interest; and
- when you complete the purchase of your new home, the mortgage on the previous home is paid off. A new loan commences on the new property – but if you are increasing the size of your mortgage, you may find that the existing rate is retained for the original amount, but a new rate applied to the extra amount.
Why your request to port your mortgage may be refused
There are several reasons why your current lender might refuse a request to port your mortgage. And, especially if you are looking to increase the amount you need to borrow, it is important to shop around for potentially more favourable mortgage deals, suggests an article in the Consumers’ Association’s Which? magazine.
There are three main reasons why your current lender might refuse a request to post your mortgage:
- you might no longer meet the lender’s lending criteria – because, for example, your financial circumstances might have changed, you are no longer in the same job and earning the same salary or, your outgoings and other borrowings might have increased;
- the lender’s criteria have changed, making you a less desirable customer that they don’t mind losing – especially if you have missed any repayments or you have become older than the lender now feels comfortable lending to; or
- the new property you have chosen to buy might not meet the lender’s criteria – it may be of non-standard construction, for example, be a listed building, have a thatched roof or require extensive modernisation and refurbishment.
Although the flexibility of porting your existing mortgage offers potential advantages, therefore, you may find that you are unable to do so.
If you are unable to port, you may need to consider starting anew by applying for a different mortgage. Do note that this is likely to involve the expense of an early repayment charge for paying off the mortgage on your existing home, an exit fee (for paying off your mortgage), and the charges for arranging your alternative new mortgage.
Getting help with mortgage porting
Seeking specialist advice may make sense. Using the services of a mortgage broker, for example, may help you choose the most suitable and cost-effective solution when looking to buy a new home – either by porting your mortgage or getting a new one.