27th September 2024

Is porting your mortgage the best way forward?

When you move home, deciding what to do with your existing mortgage can be one of the bigger financial decisions you face. Porting your mortgage - transferring your current mortgage product to a new property – is an option offered by many UK lenders. But is it always the best way forward? In this article, we'll take a look at the benefits and drawbacks of porting a mortgage, helping you make the most informed decision possible.

What is Mortgage Porting?

Mortgage porting is the process of moving your existing mortgage, with its current rate and terms, from one property to another. This is an option usually available to those who are relocating but want to keep their current mortgage deal, especially if it has favourable terms or a low interest rate.

Advantages of Porting Your Mortgage

There are many situations where porting your mortgage is the best financial move for you, but it all depends on your current circumstances. Below are a few of the main benefits of porting your mortgage:

• Retaining a Favourable Interest Rate: If you secured your mortgage at a particularly low interest rate, porting can allow you to continue enjoying these terms, potentially saving you money compared to taking out a new mortgage at a higher rate.
• Avoiding Early Repayment Charges: Many mortgage deals come with early repayment charges (ERCs) if you pay off your mortgage early during a fixed or discount rate period. By porting your mortgage, you typically avoid these charges, as you are not technically repaying the loan early, just transferring it.
• Continuity and Convenience: Porting can offer continuity, as you can avoid the hassle and time involved in searching for and applying for a new mortgage. This can be particularly convenient if you have complex financial circumstances or if you're under time pressures with your move.

Disadvantages of Porting Your Mortgage

Although porting your mortgage is a viable option in some instances, it isn't always the best way forward. In some cases, remortgaging might be the better option for you. Below are some of the drawbacks of opting to port your mortgage:

• Limited Borrowing Amount: If you require a larger mortgage for your new property, you might find that your current lender will not approve the additional borrowing on the same terms as your existing mortgage. This could mean part of your mortgage might be on a different rate, potentially complicating your finances.
• Property Restrictions: Some lenders have specific criteria about the types of properties they will finance. If your new home doesn't meet these criteria, you might not be able to port your mortgage. This can be particularly relevant with unique or non-standard properties.
• Market Changes: Interest rates and mortgage products are constantly changing. By choosing to port your mortgage, you might miss out on better deals available on the market that could be more suited to your current financial situation.

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When is Porting the Right Move?

Porting your mortgage is typically most advantageous in a rising interest rate environment, where your existing mortgage rate is lower than current market rates. It's also suited for those who face high early repayment charges and whose new property meets their lender's lending criteria.

Considerations Before Porting Your Mortgage

As porting your mortgage is a long-term commitment, you should spend some time considering if it's the right move for you. Below are a few of the main things to think about before porting your mortgage:

Compare the Market

Before deciding to port your mortgage, it's important to compare other mortgage deals on the market. Consider both the interest rates and the terms being offered. New deals may offer more flexibility or lower costs over the long term.

Check the Fees

Porting a mortgage does not mean you avoid all fees. There are often fees associated with setting up the mortgage on a new property as if you were remortgaging. This means that there could be valuation fees or higher lending charges, especially if you are borrowing more.

Assess Financial Changes

Consider how your financial situation has changed since you took out your original mortgage. You might now qualify for better rates due to improved financial circumstances, which could make switching to a new lender more beneficial.

The Application Process

If you decide that porting your mortgage is the right move, the next step is to apply with your current lender, who will assess your application as they would for any new mortgage. This will likely involve an affordability assessment and a valuation of the new property to ensure it offers suitable security for the loan.

If you're unsure about which approach is best for you, then it's a good idea to speak with a professional mortgage advisor. Discussing your circumstances with our team at WIS Mortgages will help provide you with insights into the best way to handle your mortgage, ensuring that you have the most appropriate mortgage arrangement for your circumstances.

Is Porting Your Mortgage Right for You?

Porting your mortgage can be an excellent choice for maintaining favourable mortgage terms while moving homes. However, it's not suitable for everyone. It is therefore essential to weigh the pros and cons based on your specific circumstances, including comparing other mortgage offers and considering any changes in your financial situation. Ultimately, a thoughtful approach will help you determine whether porting your mortgage is the best way forward as you transition to a new home.

If you would like further guidance around porting your mortgage, then our team at WIS Mortgages would love to help. Please contact us today if you have any questions or would like our assistance.

As a mortgage is secured against your home it may be repossessed if you do not keep up the mortgage repayments.

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Frequently Asked Questions

Q. What does it mean to port your mortgage?

A. Porting your mortgage is a way to carry your existing mortgage - alongside current rates and terms - from your current property over to a new one. You can port your mortgage if you're buying a new home while selling your existing one.

Q. Is it a good idea to port your mortgage?

A. Porting can be a great option, but it depends on your circumstances. For example, it can be a good way to retain favourable mortgage terms if the current market is dealing with high interest rates.

Q. How long does it take to port a mortgage?

A. Generally speaking, porting a mortgage will take your lender anywhere from 30 days to three months to complete the switch. This should give you sufficient time to move into the new property.

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