Coronavirus Employees' Help
1 August 2021
Porting your mortgage
If you're moving home you face the question of whether to take your existing mortgage with you or get a brand new deal – but the choice may not always be yours. This guide explains the process of porting a mortgage, whether you're likely to be able to do it and if it's the right option for you.
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Many mortgages are 'portable', which means you may be able to transfer your current mortgage product to a new property.
Even if your mortgage is portable in theory though, you may still be blocked.
Porting is a great flexible feature but there are no guarantees your lender will actually permit you to to do it – and you could end up borrowing at an uncompetitive rate to boot. Here's why porting might not work out or be the best option for you:
Before you commit to selling your property and buying a new one, you should do your checks to see if you are likely to qualify to port your existing deal or get a new mortgage.
If your checks prove you'll be able to port your mortgage, you'll need to start the ball rolling in terms of selling your current property, as otherwise prospective sellers won't take you seriously.
Until you are able to provide the new property address and details, you won't get a definite mortgage offer so be very wary of contractually committing to anything before then.
You can leave your existing mortgage, but you'll potentially face huge fines running into thousands of pounds if you do.
If you can't afford these fees to stick, the reality is you face being stuck in your current home. See our How Much Will Remortgaging Cost guide for more on the fees you're likely to face if you want to ditch your mortgage, but in brief these will be:
If you're still within your introductory offer period (eg, part way through a two-year fix) you will almost certainly have early repayment charges to pay.
These are usually 1-5% of the outstanding debt, depending on how long you have left of your intro deal. On a £200,000 outstanding debt for example, the early repayment charge will likely between £2,000 and £10,000.
If your introductory deal is over, there are unlikely to be any early repayment charges but do check.
When you pay off a mortgage (including when you remortgage to a new lender – as the new provider pays off the debt on the old deal) you normally pay an exit fee, which is usually a few hundred pounds. It might be called a deeds release fee or a final fee, but you may have already paid it upfront when you took out the mortgage, so do check.
Once you've exited your old deal, you'll likely need to pay an arrangement fee and valuation fee for your new mortgage, so make sure you factor these in too.
The key to this will be to look at the maths, and see if it adds up for you. Many borrowers will find that even though they can port their mortgage, the rates on offer won't be that attractive.
If that's the case, it'll be worth seeing if it makes financial sense to pay the penalty for leaving your existing home loan and taking out a brand new mortgage elsewhere.
If you have a few years left on a cheap deal, you are more likely to want to stick with your current mortgage than, say, if you only have a few months to go. This is because the earlier you leave a deal, the heftier the fees (as discussed in the previous chapter). Of course, if you've a long time left on a particularly pricey deal then, even with the fees to switch early, it may be wise to leave – do the maths first.
To find the cheapest option, you need to work out the cost of keeping your current deal and compare it to the cost of ditching and taking a new deal. Make sure you've included the cost of any fees for exiting your current deal and starting a new one – including arrangement fees – in your calculations.
Whichever option you choose, you will need to go through a new mortgage application. That means you'll have to pass a number of tests – see our Boost Your Mortgage Chances guide for tips on how to increase your prospect of passing these.
Here's what lenders will look at when you apply for a mortgage:
A good broker can advise you on which lender is most likely to accept you based on your circumstances, whether that be your income, credit score or type of property. Have a read of our Cheap Mortgage Finding guide for information on how to speak to a broker.
According to the Financial Conduct Authority, there are around 250,000 so-called mortgage holders trapped in their current mortgage deal. If you can't move away from your existing mortgage deal, then it's likely that you are one of these 'mortgage prisoners'.
For mortgage prisoners, stricter affordability tests have made it difficult to switch to new mortgage deals, even though these are CHEAPER than prisoners' current rates. But, in part due to MSE campaigning, the FCA has called for a relaxing of mortgage affordability tests – hopefully throwing a lifeline for mortgage prisoners. For more on these latest developments, see our MSE news story.
For more advice if you're in this situation, seek a mortgage broker. Also see our Boost Your Mortgage Chances guide to help you get back on your feet as quickly as possible.
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