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If you’re thinking about moving to a new home, you might have heard the term “porting your mortgage.” It’s an option that can save you money and hassle—but it’s not always as straightforward as it sounds. As someone who’s been in the mortgage world for a while, I know how overwhelming it can feel to figure out if porting is the right move. So, let’s break it down step by step, and by the end, you’ll have a clear understanding of how it all works.
What Does Porting Your Mortgage Actually Mean?
In simple terms, porting your mortgage means taking your existing mortgage deal—your interest rate, terms, and lender—and transferring it to a new property. It’s like picking up your current loan and moving it to your new home.
Sounds great, right? But here’s the catch: porting isn’t automatic. Even though you’re staying with the same lender, you’ll still need to go through an application process, and there are a few hoops to jump through.
Step-by-Step Guide to Porting Your Mortgage
1. Check Your Mortgage Terms
The first thing you’ll want to do is dig out your mortgage agreement or speak to your lender. Not all mortgages are portable, so it’s crucial to confirm this upfront. If your mortgage can’t be ported, don’t worry—you might still have other options, like switching to a new deal.
2. Speak to Your Lender or Broker
Once you know your mortgage is portable, the next step is to have a chat with your lender or, ideally, a mortgage advisor (like us at Verve Financial!). We’ll help you understand if porting makes financial sense or if you’d be better off switching to a new mortgage with another lender.
3. Affordability Checks
Here’s where things can get a little tricky. Even though you’re sticking with the same lender, they’ll still want to reassess your finances. They’ll look at your income, expenses, and credit history to ensure you can afford the new mortgage. This is especially important if your circumstances have changed since you first took out the loan.
4. Property Valuation
Your lender will also need to approve the new property you’re buying. They’ll arrange a valuation to ensure it meets their lending criteria. If the property is considered high-risk (like a non-standard construction or a property above a shop), it could complicate things.
5. Additional Borrowing (If Needed)
If you’re moving to a more expensive property, you might need to borrow extra funds. This could result in a “top-up” loan with different terms or rates than your existing mortgage. It’s worth understanding how this might affect your overall payments.
6. Fees and Costs
Porting isn’t always free. Some lenders charge fees for the process, and there may be costs for valuations or legal work. Make sure you’re clear on all the charges upfront.
7. Approval and Completion
Once everything is approved, your existing mortgage will transfer to the new property, and any additional borrowing will be added as a new loan. From there, you’ll complete the purchase of your new home and move in!
Benefits of Porting Your Mortgage
Keep Your Existing Rate: If you’re on a competitive fixed-rate or tracker mortgage, porting can help you retain that lower rate—even if interest rates have risen.
Avoid Early Repayment Charges: By porting your mortgage, you can avoid costly fees that might be incurred if you were to pay off your current mortgage early.
Streamlined Process: In many cases, sticking with the same lender makes the process smoother, as they already have your financial details.
When Porting Your Mortgage Might Not Be the Best Option
While porting can be beneficial, it’s not always the right choice for everyone. Here are a few things to consider:
- Affordability Checks: Even though you’re staying with the same lender, they’ll reassess your financial situation. If your income or credit has changed, this could impact your application.
- Additional Borrowing: If you’re buying a more expensive property, you may need to take out extra borrowing. This could mean a separate loan with a different rate, making things more complex.
- Fees and Costs: Some lenders charge fees for porting, so make sure you’re clear on all associated costs.
How to Decide If Porting Is Right for You
Deciding whether to port your mortgage depends on your unique circumstances. Here are some key questions to ask:
- Are current mortgage rates higher or lower than your existing rate?
- Will your lender approve the new loan based on your financial situation?
- Are the fees for porting less than the potential savings of switching lenders?
