Porting your mortgage: How does it work?

Host: Some of you might be wondering what exactly porting is, and some clients have asked whether it is possible to port their mortgages. I’m Pradeesh, and today I have with me mortgage adviser Ifthikar Muhammad.

Q&A: What is Mortgage Porting?

Pradeesh: Ifthikar, what exactly is porting?

Ifthikar Muhammad: When people move houses, they can sometimes take their mortgage with them, and that’s known as porting.

• Example: If you have a £200,000 mortgage at 3% and the current rate is 5%, breaking the mortgage might incur a penalty.
• Instead, you can take your mortgage with you. If you need a £300,000 mortgage for your new home, you can port the existing £200,000 and top it up with a new mortgage.

Q&A: Can I Port My Current Mortgage?

Pradeesh: Let’s say I have a mortgage at 3.5% and I want to move. Can I port it with my current lender?

Ifthikar Muhammad: Most lenders include a porting clause in your mortgage offer. Check your contract first to confirm. Most lenders allow porting, but you are tied to the same lender for any top-up mortgage.

Q&A: How Does a Top-Up Mortgage Work?

Pradeesh: If I top up my mortgage, does it create a separate account or a new mortgage?

Ifthikar Muhammad: Usually, it creates a second account. Your original mortgage remains as account one, and the top-up becomes account two. Terms may not match perfectly, so you could have two different end dates.

Q&A: Are Interest Rates and End Dates Different?

Pradeesh: So, each mortgage account could have different interest rates and end dates?

Ifthikar Muhammad: Yes. With fixed-rate deals, you may have two different deal end dates. Variable rates on top-ups might not have penalties, which could help, but generally, you may end up with two products and two different end dates.

Q&A: Calculating Early Repayment Charges

Pradeesh: How do I calculate penalties if I stay on a fixed deal while porting?

Ifthikar Muhammad: Look at how much you would pay as a penalty for breaking your current mortgage and compare it with what you save by moving to a new deal.

Example: Current rate 4%, penalty 1% → effective rate becomes 5%. Advisers can calculate these scenarios for you.

Q&A: Straightforward Porting Scenario

Pradeesh: What if I move to a similar house and the outstanding loan is sufficient to fund the new purchase?

Ifthikar Muhammad: That’s the ideal scenario. Complications arise when upsizing, as you might need an additional loan. Downsizing may create adjustments in repayments or early repayment charges for part of the loan.

Q&A: What Happens If I Don’t Sell My Current House?

Pradeesh: If I port my mortgage but don’t sell my current house, what happens?

Ifthikar Muhammad: That’s called a let-to-buy. You rent out your current property while buying a new one. Lender approval is required, and a let-to-buy mortgage may be needed.

Q&A: When is the Best Time to Port a Mortgage?

Pradeesh: What’s the best time to port a mortgage?

Ifthikar Muhammad: It depends on your circumstances. Determine whether porting saves you money or if another mortgage is better. Speak with an adviser or your bank to do these calculations properly.

Pradeesh: Thank you, Ify, for that valuable information. For viewers, if you have questions about porting your mortgage, contact your mortgage adviser or your bank. Porting is not always straightforward, so professional advice is recommended.

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