If you are moving home you might be able to keep your existing mortgage and move it over to your new property – this is known as 'porting'.
Keep your mortgage when you move
Porting is a little bit like remortgaging, except that you're staying with the same mortgage provider. You might not necessarily get a better deal but you could avoid some of the remortgaging fees associated with repaying your mortgage early – and in theory, it should be easier to arrange because you're dealing with the same provider as before.
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Can I keep my mortgage when I move?
You can keep your mortgage when you move but doing so may not always make the most sense. There are some obvious advantages if you decide to ‘port’ your existing mortgage to a new home.
Firstly, you don’t have to research and compare mortgages from new lenders. Secondly, you're not as likely to have to fill out lots of paperwork, as your lender already has all of your information. And lastly, you will avoid having to any penalty fees for leaving your mortgage early.
However, you do have to apply to 'port' a mortgage as it is technically still a new deal. This means you could still be rejected if your circumstances or even the lender's criteria for approval has changed.
For example, if your employment status has changed, or you're on a lower income, or you have more expenses suddenly from, say, having a baby, then it might be harder to apply to port your mortgage to a new home.
If you need to borrow more money than what your mortgage is worth, then porting may not be possible. This means you may have to take out a completely new mortgage with the provider (and therefore do the application all over, and potentially pay early repayment fees), or you could look at remortgaging deals.
What is porting a mortgage?
Porting a mortgage is essentially moving your existing mortgage over to a new home.
If you are selling your existing home and moving into somewhere new, you might be able to port that mortgage over instead of having to get a brand new one.
If you are not selling, or your new property is of a greater value, then you may have to take out an additional mortgage, which would be more costly and more of a hassle.
How does porting work?
Many mortgages on the market are 'portable', so check the terms of your deal to see if it is allowed.
When you move home, there is the issue of what to do with your existing mortgage.
You can move the existing mortgage to your new home, generally if your new home is of the same value or less than the existing mortgage. However, early repayment charges are likely to apply.
Usually, early repayment charges apply if you only port some of your mortgage (rather than all of it), or there's a delay between the sale of your existing home and completing the purchase of the new one.
Step by step to porting
- Check your original mortgage offer's terms and conditions to see if your mortgage has the 'porting' feature.
- Decide how much you actually need to borrow for your new home — if it's the same value or less than your existing mortgage value, then you should be able to port it.
- Check if there are any early repayment charges to be made. These usually apply if you are only porting some of the mortgage or there's a delay between the sale of your existing home and the purchase of the new home.
- Call up your mortgage provider to see if porting your mortgage will be possible. However, there are some things to watch out for.
Things to watch out for when porting
While porting your mortgage can seem more flexible and simpler than taking out a new mortgage, it may not always work out as smoothly in reality.
In fact, you may be blocked from porting your mortgage if you no longer qualify for a mortgage, or if you need to borrow more than your existing mortgage is worth. There are some other things to watch out for like being forced to take out a new mortgage deal (instead of porting) and having to pay all the new fees, or ending up on a deal with a higher rate of interest.
You no longer qualify for the mortgage
More and more customers are finding it harder to port their mortgage because they do not qualify for the same product they qualified for previously. It may seem like a foregone conclusion that you will be approved for the same mortgage again, but this is not always the case.
Since the Mortgage Market Review in 2014, mortgage lenders have imposed tougher affordability checks and tightened their belts when it comes to lending out the same amounts of money. For example, if you were able to borrow £200,000 and your circumstances have not changed since then, you may only get £180,000.
Your circumstances might have also changed. Lenders will now look at your everyday expenses, and how much debt you have. If those amounts are higher — maybe you had a baby or bought a new car — then you may find it harder to be approved to borrow the same amount as before.
Ultimately, there is the possibility that you will be rejected for the mortgage entirely, so it's worth doing some research in advance to see how your circumstances might affect your application.
You may not be allowed to borrow more
If the new home you're moving to is worth more than your existing mortgage, the lender may block you from porting your mortgage. In such cases, they may ask you to consider taking out a new mortgage, and therefore having two loans – otherwise, you may simply have to look elsewhere.
If you do borrow more then you might have two mortgages to repay
If the lender says to you that the only way they can lend you more money is through an additional mortgage product, then you would likely have to pay all the associated fees of setting up a new mortgage: arrangement and booking fees.
You will probably have to pay your second mortgage at a higher rate as the mortgage provider will look to reduce the risk of lending out more money than they would normally.
You could end up borrowing at a higher rate of interest
Many mortgage providers know that porting is a more flexible and generally simpler option when moving home than remortgaging. As a result, many of the porting deals are unlikely to be very competitive, and you could end up being stuck paying a higher rate of interest.
Should I remortgage to a new lender when I move house?
If you can get a cheaper deal, then you should certainly consider remortgaging to a new lender. However, you should watch out for exit fees. These can be far higher if you are still only in the introductory period of your existing mortgage.
It is worth doing your research and calculating the costs, as leaving your existing mortgage early and remortgaging might still end up cheaper in the long if the ported mortgage has a high rate of interest.
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