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What happens when porting a mortgage?
The purpose of this article is to inform you about the process referred to as porting a mortgage, which means transferring your current mortgage from your old home to your new one.
Moving house is a huge undertaking and involves a massive amount of work. It can be an exciting time and stressful, and porting your mortgage might not be the first thing on your mind.
Sometimes a move to a new property is prompted by the desire to have a larger or more functional home, to accommodate a growing family, or relocate to a new job. Other times it might be the result of a divorce or downsizing.
No matter what brings you here, moving to a home can be traumatic enough without dealing with all the paperwork involved.
One of the biggest questions which usually arises during this moment is: can I transfer my existing deal from my old home to my new one, or do I need to find a new mortgage. We'll try to answer all of your questions about mortgage porting in this article.
What does a portable mortgage deal mean?
A portable mortgage allows you to transfer it from one property to the next. If your mortgage is portable, it means that you will be able to keep the same loan agreement, type of rates and monthly mortgage payments on your new home.
The aim is to keep all of your financial affairs as streamlined as possible and avoid unnecessary costs.
When transferring your current deal, your existing lender will only allow some of their products to be transferred from one property to another. There are also certain criteria that need to be met before the lender agrees to this process; for example, the property should be comparable to your current property in terms of construction type.
For example, if your existing mortgage is based on a standard construction (brick and mortar) property, and the property you're moving to is steel-framed or has a thatched roof, you may find that your current lender can't help you, and you need to find a new mortgage.
Why do people port a mortgage?
There are several benefits of porting your existing mortgage.
The main benefits of mortgage porting are that you can avoid early repayment charges, reduce the amount of paperwork and upheaval associated with moving, as well as avoid the hard search on your credit record.
Overall, porting your mortgage means that you can ensure a smooth transition from one home to the next without having to worry about financial issues or additional costs.
If you choose to apply with a different lender, this could mean that you end up paying a fine for existing your existing mortgage early, and you could also see a mark added to your credit file, both of which will make it harder for you to find a new deal.
It's important to note that different lenders have different criteria and requirements when it comes to porting a mortgage.
Is every mortgage portable?
Unfortunately not. Not every mortgage is portable, so you need to check whether your existing mortgage is portable before you start searching for a new home.
The first step is to check with your current lender whether your product can be ported to another property. Your lender will ask you for some specific information before this process can be completed, which you can provide via phone, email or in writing.
From there, you need to ensure that your current mortgage deal and property meet the lender's eligibility criteria before moving forward.
Is it a good idea to port a mortgage?
The answer is, it depends. If you're on a fixed mortgage with early repayment charges, porting your mortgage can mean you avoid potentially thousands of pounds in fees.
If you're happy with your current deal, it could make sense for you to port your mortgage to a new home.
However, if you're unhappy with your current deal, and won't suffer early repayment charges with your mortgage lender if you remortgage with a new mortgage lender, then it might make sense to find a new mortgage.
If you're unsure of your options and need mortgage advice, an experienced mortgage broker can help you to assess your prospects.
How long does it take to port a mortgage?
Porting a mortgage can take a few weeks to complete.
It's important to start this process as soon as you can to allow sufficient time for all the checks to be completed on your new home.
Do you need to qualify when porting a mortgage?
In short, yes. Your lender will need to re-confirm your financial circumstances before agreeing to port your mortgage to a new home.
Effectively this means that even if you qualified for the mortgage the first time around, unfortunately, there is no guarantee that you'll qualify again.
One thing that's key when transferring a mortgage is the credit report, which will confirm if there have been any late mortgage payments or defaults in payment on accounts.
Mortgage lenders use this when deciding whether to port your current mortgage and if they're willing to provide the same sort of deal on the new property.
Even if you're porting your previous mortgage, you'll still need to re-qualify with your lender as if it were a new deal. Mortgage brokers should be the first port of call when it comes to getting advice on whether to carry on with the same lender or switch to a new mortgage deal.
If your situation has changed, for example, you no longer have a good credit rating or you're concerned you will no longer meet the affordability rules, it could make financial sense to consider a new mortgage application process to avoid rejection with your current lender.
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What does transferring a mortgage involve?
There are several steps you need to follow when transferring your current mortgage deal to another property.
Your lender or mortgage broker will be able to explain what's involved and what you need to provide before they agree to port your mortgage.
Even if you're porting your mortgage, there will still be additional fees to pay, including valuation fees, an arrangement fee and legal fees. You may also be required to pay a small exit fee depending on the lender and your mortgage deal.
Can I port my mortgage to a more expensive property?
If you're hoping to port your mortgage and your new property is more expensive than your current property, the additional borrowing is likely to be offered at a different interest rate.
This means rather than a single mortgage product, you'll have multiple with varying terms and mortgage rates.
If you're looking to buy a more expensive property, you would need to ensure that you meet the lending criteria to borrow additional money, have enough cash savings for stamp duty, and also pay any additional legal fees and valuation costs.
What happens if you have a mortgage but want to move?
The answer to this question will depend on your mortgage deal, the property you're buying and your overall situation.
If you're in line to pay a hefty early repayment charge, porting your mortgage could be a great option for you and could save you thousands of pounds. This would also avoid any arrangement fees and solicitor costs of remortgaging.
However, depending on the terms and conditions of your existing deal and new mortgage offer, it might be cheaper to find a new lender and remortgage.
It may be more affordable for you to remortgage via a new lender if you could get a more competitive rate which would save you more money in the long term.
The overall decision will be based on your personal circumstances and the financial implications of either course of action.
Regardless of whether you're sticking with your existing deal or transferring to another lender, we would always recommend that you speak to an independent mortgage broker who can help assess options and compare mortgages.
How does mortgage porting work?
When you port your mortgage, your lender will transfer your existing mortgage to the new property at the same rate of interest as your existing mortgage rate.
Understand your mortgage porting options
There are a few things you need to take into account when transferring your mortgage, such as the fees involved and whether you still meet the lending criteria.
It's important to speak to an independent mortgage broker to get advice on what's the best option for you.
At Teito, we work with 90+ lenders offering 20,000+ mortgage deals. Our team of specialist mortgage brokers are on hand to provide you with impartial advice on the best products that suit your needs.
Get started now, and you can determine what the best route is in minutes. We keep things simple, looking at your circumstances, goals and what's important for you.
Best of all, it's quick and easy – start a conversation with us today!
Choosing an Adviser
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Read reviews from previous clients and make sure they provide a clear explanation of the products and services they offer, as well as the fees and charges associated with them.