Moving house is a complex process, and one of the biggest financial questions you’ll face is what to do with your existing mortgage. If you’re on a fantastic low fixed-rate deal, the thought of giving it up can be painful, especially if current interest rates are higher.
This is where “porting” your mortgage comes in. Porting allows you to effectively pick up your current mortgage deal – including its interest rate and terms – and transfer it from your old property to your new one.
It can be a brilliant way to save money and avoid hefty Early Repayment Charges (ERCs), but it’s not always the right or most straightforward option. This guide will explain everything you need to know about porting your mortgage.
What is Mortgage Porting?
Mortgage porting is a feature included in many, but not all, mortgage deals. It gives you the flexibility to take your current mortgage product with you when you move. You are not simply changing the address on your paperwork; you are essentially applying for your mortgage all over again, but with the aim of keeping the same interest rate.
This is particularly valuable if you are still within the introductory deal period of a fixed-rate mortgage and would otherwise face thousands of pounds in ERCs for leaving the deal early.
How Does Porting Work?
Even though you are keeping your existing deal, your lender will treat the port as a new mortgage application. This is a crucial point to understand.
You will need to go through the full affordability and credit checks again. Your lender will re-assess your:
- Income: They will need to see up-to-date proof of your salary and any other income.
- Outgoings: They will review your current financial commitments.
- Credit History: They will run a new credit check.
- The New Property: The property you are buying must meet the lender’s criteria, and they will conduct a new valuation on it.
Your circumstances must meet the lender’s current criteria, which may have become stricter since you first took out the mortgage.
What if I Need to Borrow More?
This is a very common scenario. If your new home is more expensive than your current one, you will need to borrow more money. In this case, your lender will typically:
- Port your existing mortgage amount at your current interest rate.
- Provide the extra borrowing as a separate, new mortgage product.
This means you could end up with a “split” mortgage, with two parts on different interest rates and potentially with different end dates.
What if I’m Borrowing Less?
If you are downsizing and your new mortgage is smaller than your existing one, you will need to repay the difference. Be aware that if you are still in your introductory deal period, you may have to pay a pro-rata Early Repayment Charge on the portion of the loan you are paying back.
The Pros and Cons of Porting Your Mortgage
Advantages:
- Keep a Great Interest Rate: The biggest advantage is keeping a competitive interest rate in a higher-rate environment. This can save you a significant amount of money on your monthly payments.
- Avoid Early Repayment Charges (ERCs): Porting allows you to avoid paying the ERCs that would be triggered if you paid off your mortgage to move to a new lender. These charges can often amount to thousands of pounds.
Disadvantages:
- You Must Re-apply: It is not an automatic process. If your financial circumstances have changed (e.g., you’ve become self-employed, had a drop in income, or your credit score has worsened), your lender could decline your porting application.
- The New Property Must Be Acceptable: If the property you want to buy doesn’t meet your lender’s criteria (e.g., it’s a non-standard construction), they may refuse to lend on it.
- May Not Be the Best Deal: Even if your current rate is low, it might not be the most cost-effective solution overall. A new lender might offer a slightly higher rate but with no arrangement fees or a cashback incentive that makes it a better overall deal.
- Complexity of “Topping Up”: Having a split mortgage with two different rates and end dates can be complicated to manage in the future.
When is Porting NOT the Right Option?
Porting isn’t always the best choice. You should explore getting a completely new mortgage if:
- You are no longer in your introductory deal period: If you are on your lender’s high Standard Variable Rate (SVR), there is no benefit to porting it. You should be looking for a new deal.
- Your current deal has no or very low ERCs: If it costs little or nothing to leave your current mortgage, you are free to shop around the entire market to find the very best deal available.
- Your loan-to-value (LTV) has significantly improved: If you have paid off a good portion of your mortgage or your property value has risen, you may have a much lower LTV, giving you access to the best rates on the market which could be better than your current deal.
The Best First Step: Get Expert Advice
The decision to port your mortgage or get a new one is a complex calculation. It involves weighing up interest rates, fees, ERCs, and your personal financial situation.
The best first step is always to speak to a professional mortgage advisor. They can:
- Review your current mortgage deal and its porting features.
- Calculate the true cost of porting versus the cost of a new mortgage, taking all fees into account.
- Search the whole market to see what new deals are available to you.
- Advise you on the most cost-effective solution for your specific move.
An advisor can handle the entire application process for you, whether you decide to port or switch, ensuring your move is as smooth and financially efficient as possible.
