A Guide to Porting Your Mortgage

When you move home, it is also possible to retain the same mortgage, this is referred to as porting your mortgage. When doing so you do not need to look for a new offer, should you be happy with your current mortgage. The majority of mortgages are portable, below we will discuss the process and what it entails.

Why should I port my mortgage?

Many borrowers decide to port their mortgage as they on a deal which they favour as it has a low interest rate or to avoid paying an early repayment charge should they have not owned their original property long enough. An early repayment charge or ERC, is a percentage of the loan to repay the mortgage in full before the conclusion of the term. Lenders typically charge in the region of 3%-5% as an early repayment charge which can be very expensive depending on the mortgage amount.

How does it work?

There is little difference to porting your mortgage and obtaining a new mortgage. When selling your property, the mortgage is redeemed meaning the full amount has been repaid. Even though you are agreeing to proceed with the same mortgage product you will have to apply for a mortgage again as you will be requesting your lender for funds to buy the new property. In order to determine the mortgage advance, your lender will usually look to carry out a valuation of the property you wish to purchase and analyse your household income to ensure any proposed monthly repayments can be met comfortably in addition to regular expenses.

Can they refuse?

The main basis for refusal is because customers do not meet the criteria for affordability. It is not even uncommon for people who are looking to borrow less or the same money to be rejected due to stricter requirements implemented in the Mortgage Market Review 2014.

Want to borrow more money?

If you wish to borrow more money, your existing loan can be topped up. An additional application must be made for the extra money money before both amounts are combined.

It may be worth trying to ensure both deals overlap and end around the same period to avoid incurring any early repayment charges.

If you wish to retain the same deal with your existing lender, you cannot request additional funds form an alternative lender. This is because the vast majority of lenders will only allow a first charge mortgage in which they are the primary creditor should you default on your mortgage. This will allow them to become the sole owner upon repossession rather than several lenders.

What if my lender refuses?

If your lender refuses, the first step is to request they review their decision and ask them in what specific basis it is being refused. If you feel your lender is acting unreasonable, it may worth raising the issue with the Financial Conduct Authority and Financial Ombudsman Service.

If you are still unsuccessful, the next step is to find a different lender if this is an option. If not, wait until your finances improve and it becomes viable for you to port.

For more information, please contact us.