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What is a transferable mortgage?
A transferable mortgage, or portable mortgage, is a mortgage that can be transferred from one property to another, without the need for a brand new mortgage application.
This can be an attractive option for people who are looking to move house but don't want to go through the hassle and expense of getting a new mortgage or facing hefty early repayment charges.
The main advantage of a transferable mortgage is that it can save you time and money. If you're happy with your existing mortgage deal and don't want to change it, then there's no need to go through the process of applying for a new mortgage. In agreement with your mortgage lender, you can simply transfer your existing mortgage to the new property.
If you're thinking about transferring your mortgage, it's important to speak to a professional mortgage advisor first. They will be able to assess your individual circumstances and advise you on the best way to proceed.
How does transferring a mortgage work?
If you're looking to move house but want to keep your current mortgage deal, then you may be able to port your mortgage. This means that you can transfer your mortgage from your current property to your new property.
To port your mortgage, you'll need to apply to your lender for permission. They'll then assess whether or not you're eligible and give you a decision. If you're approved, then you can go ahead and move your existing mortgage.
Why would you port a mortgage?
There are many reasons why you might want to port your mortgage. The main one is to avoid paying Early Repayment Fees, which can be expensive. If you pay your mortgage early, you may be charged an exit fee of up to 5% of the mortgage balance. This can add up to a lot of money, so it's worth considering a portable mortgage if you're planning on moving house within the next few years.
Another reason to port your mortgage is to save time and money on applying for a new mortgage deal. If you're happy with your existing mortgage deal, then there's no need to go through the hassle of applying for a new one. You can simply transfer your mortgage to the new property.
Will I pay Early Repayment Charges (ERCs) if I transfer my mortgage?
As long as you're not transferring to a cheaper property and making a large payment on your mortgage in the process, you should be eligible to port your mortgage without incurring any early repayment charges.
A typical early repayment charge is around 2-5% of your outstanding mortgage balance, so it's definitely worth considering when moving home.
If you're thinking about transferring your current deal, contact your current lender to discuss your options.
Can you transfer your mortgage to another person?
In some cases, you may be able to transfer your mortgage to another person. This is known as a transfer of equity and is commonly used in specific situations including:
- If you're separating from your partner and want to transfer ownership of the property to them
- If you want to add someone else onto your mortgage (for example, a family member)
- If you want to take someone else off your mortgage
You can learn more about adding or removing someone from your mortgage in our dedicated guide.
As with any type of mortgage, it's important to speak to your lender before you make any decisions. They'll be able to advise you on the best course of action and let you know if transferring your mortgage is possible.
Porting your mortgage to a more expensive property
If you're looking to move house and your new property is more expensive than your current one, unless you are adding in additional funding you may need to increase your borrowing.
This may be possible with your existing lender but could be problematic if you're already at the limit of what they are prepared to lend. In this case, it may be necessary to look for a new mortgage deal with a different lender or consider other options.
Porting your mortgage to a cheaper property
If you're considering porting your mortgage to a cheaper property, your lender will need more information about your financial situation before they can make a decision. If your borrowing remains the same but the property value is reduced, this will increase the Loan to Value ratio (LTV) of your mortgage.
Your lender may be reluctant to agree to this if they feel that you're borrowing too much relative to the value of the property. In this case, it may be necessary to look for a new mortgage deal with a different lender or consider other options.
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Is porting a mortgage difficult?
Assuming your personal situation hasn't changed, the process of porting your mortgage should be relatively straightforward. You'll need to contact your lender and let them know that you're looking to move house but want to keep your current deal.
They'll then assess your situation and let you know if you're eligible to port your mortgage. If you are, then you can go ahead and start the process.
If you're not eligible to port your mortgage, then you'll need to look for a new deal with your current lender or switch to a different one. This will usually involve paying Early Repayment Charges (ERCs) on your current deal, so it's important to weigh up all your options before making a decision.
New affordability rules
Since March 2019, there have been changes to the way that affordability is calculated for mortgage applications.
This means that if you're looking to port your mortgage, your lender will need to reassess your affordability before they can agree to transfer your deal.
The new rules are designed to make sure that people can still afford their mortgage payments if interest rates rise in the future.
Do you pay arrangement fees when porting a mortgage?
No, assuming you're not making any changes to the amount you're borrowing, you shouldn't have to pay an arrangement fee. If you're looking at additional borrowing (more money) with your current mortgage provider, then you may be charged an arrangement fee.
If you're looking to port your mortgage to a new property, the valuation fee and legal fees will need to be paid as normal. These are not considered arrangement fees and are separate from any charges you may incur for switching mortgage deals.
How common is porting a mortgage?
Porting a mortgage is relatively common, although not all mortgages are portable. It's important to check with your lender before you make any decisions.
As with any major financial decision, it's important to speak to seek professional mortgage advice before you make a decision.
How long does porting a mortgage take?
The length of time it takes to port a mortgage varies depending on the lender and the situation. However, it's generally a relatively quick process.
Will my mortgage repayments be the same?
Yes, assuming you're not making any changes to the amount you're borrowing, your monthly repayments should stay the same.
Can I borrow more if I port my mortgage?
You may be able to borrow more if you port your mortgage, depending on the lender and the situation. However, this will usually involve paying an arrangement fee.
If you're looking to borrow more money, it's important to seek professional advice from an experienced mortgage broker before making a decision.
Is there a minimum period I need to have my mortgage for before I can port it?
The minimum period you need to have your mortgage for before you can port it varies depending on the lender. However, it's generally not possible to port your mortgage until you've had it for at least a year.
Is porting a mortgage the same as remortgaging?
No, porting a mortgage is not the same as remortgaging.
When you port your mortgage, you're simply moving your existing deal with the same lender to a new property. This means that your monthly repayments should stay the same, as should the interest rate and any other terms and conditions of your mortgage.
When you remortgage, you're taking out a brand new deal with a new lender. This means that you may be able to get a better interest rate, but you may also have to pay any Early Repayment Charges (ERCs) on your current deal.
It's important to seek professional advice from mortgage specialists before making any decisions.
Seek professional mortgage advice
Our team at Teito have experienced mortgage advisors and can help you find the right deal for your needs. We can also provide expert advice on the porting process and guide you through every step of the way.
Get in touch today to see how we can help you.
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