If you’re looking to move to a new home but already have a mortgage on your current property, it may be worth transferring your mortgage to your new property in a process called ‘porting’.
Let’s take a look at what porting a mortgage means, how it works, and whether or not it is the best solution for you.
For help with finding a mortgage, contact our mortgage adviser partners Embrace Financial Services today.
What does porting a mortgage mean?
Porting a mortgage involves transferring an existing mortgage from one property to another when you sell your current home and purchase a new one. This process allows you to keep your existing mortgage rates, terms, and conditions when you move.
How does porting a mortgage work?
Assessment of eligibility
To port your mortgage, you must meet certain eligibility criteria set by your lender. This may include factors such as maintaining a good credit score, adhering to specific loan-to-value (LTV) ratios, and ensuring the new property meets the lender's criteria.
Application process
Once you've identified a new property and confirmed its eligibility for mortgage porting, you'll need to submit an application to your lender. This application will typically include details about the new property, such as its purchase price, as well as any relevant documents requested by the lender.
Property valuation
As part of the mortgage porting process, the lender will require that a valuation of the new property takes place to assess its market worth. This valuation helps determine the maximum amount of mortgage that can be transferred to the new property.
To give you an idea of your property’s current value ahead of your lender’s valuation, book a home valuation with Whitegates.
Financial assessment
Your lender will also reassess your financial situation to ensure you're still capable of meeting the mortgage payments on the new property. This may involve a review of your income, expenses, and any changes in your financial circumstances since the initial mortgage approval.
Transfer of mortgage
Once the application is approved and all necessary assessments are completed, the existing mortgage is transferred to the new property. This involves amending the terms of the mortgage contract to reflect the details of the new property.
Financial adjustments
In some cases, you may require additional financing to cover the cost difference between the sale price of your existing property and the purchase price of the new property. Your lender may offer to provide this additional financing, subject to their lending criteria.
Completion
Once all the necessary paperwork is finalised, the mortgage porting process is complete and you can proceed with the purchase of your new home.
Related: Steps to buying and selling a house at the same time
Benefits of porting a mortgage
Depending on your existing mortgage and financial situation, porting your mortgage can be beneficial for a variety of reasons.
Maintaining favourable terms
Porting a mortgage allows you to keep your existing mortgage terms, including your interest rate and repayment schedule. This can be particularly beneficial if you secured a competitive interest rate or favourable terms when taking out your existing mortgage.
Avoiding fees
Porting can help you avoid penalties associated with breaking your mortgage agreement early. By transferring your existing mortgage to your new property, you can sidestep prepayment penalties that may otherwise apply.
Simple process
By transferring your mortgage, you can streamline the homebuying process by eliminating the need to secure a new mortgage and negotiate terms with a different lender. This can save time and reduce paperwork, making the transition to a new home more straightforward.
Cost savings
It can also result in cost savings compared to obtaining a new mortgage, as homeowners can avoid certain fees and expenses associated with taking out a new mortgage.
Things to consider when porting a mortgage
While porting a mortgage can offer advantages, you should carefully consider your financial situation and whether porting is the best option for you.
Porting restrictions
You need to make sure you’re aware of any restrictions or limitations imposed by their lender. Some lenders may have specific criteria that must be met for a mortgage to be ported, and not all mortgages are portable.
Property issues
The lender requires a valuation of the new property to determine its suitability for porting the mortgage, so you should be prepared for the possibility that the lender may not approve the porting if the new property does not meet their criteria.
Additional financing
In some cases, you may need additional financing to cover the cost difference between the existing mortgage and the new property. This could involve securing a second mortgage or accessing other sources of funding.
Related: Top tips for planning your finances before you move
Why it’s important to use a mortgage adviser
Mortgage advisers are experienced professionals with in-depth knowledge of the mortgage market, meaning they can evaluate whether porting is the most suitable option for you. They can provide expert advice tailored to your specific circumstances, helping you understand the complexities of the process and navigate potential challenges effectively.
With access to a wide range of mortgage products from various lenders, advisers can help you explore different porting options beyond your current lender, potentially securing more favourable terms or better deals that suit your needs and financial situation. Speak to our mortgage adviser partners today.
Ready to move to a new home? Contact your local Whitegates branch today.
Further reading:
What is the cost of moving house?
Downsizing or Equity Release? What’s best for you
What is a mortgage in principle?
