The act of transferring a mortgage to another property is called ‘porting’. If you have a mortgage and are moving home, you may want to consider taking your mortgage with you. By doing so, you would continue with the terms and conditions of your current mortgage, including the interest rate. But there are times when porting your mortgage will not make financial sense.
What is meant by ‘porting’ a mortgage?
If you have a fixed, tracker or variable rate mortgage, it can make sense to move this product with you when you move home. Most mortgages are portable and so could, subject to certain considerations, be taken with you if you decide to move.
Transferring a mortgage to another property explained
Essentially, if you decide to take your mortgage with you when you move home, you transfer your existing product to your new property. The terms and conditions are also transferred onto the new property, as is the interest rate. This makes sense if you have a great deal but it may be that a new product would offer you a cheaper loan in the long term.
But how does it work? When you move home, you’ll apply for a new mortgage in the usual way. The lender will assess your application based on your income, outgoings, and personal circumstances as well as the value of the new property. The lender will then make a decision on whether to lend to you or not.
This approval is important because it is only at this point when a lender will consider porting your mortgage.
What about credit checks?
Yes, there are still credit checks for transferring a mortgage as you will be applying for a mortgage in the normal way.
Are fees payable for transferring a mortgage?
Yes because you are, in essence, applying for a new mortgage. To port a mortgage, a lender must first approve you for a new mortgage and agree to port the terms and conditions and the rate.
To avoid any early repayment charge, some lenders will require you to complete on the new property on the same day whereas others will give a window for the new completion of up to 3 months. If it is not a simultaneous sale and purchase, this will involve initially incurring any early repayment charge with it being refunded when your new purchase goes through assuming the new mortgage is for the same or more than the previous amount.
In terms of fees, you could pay valuation fees, legal fees, and stamp duty (if applicable), application fees, and mortgage broker fees.
Why transfer your mortgage?
There are many pros and cons to transferring a mortgage as @advisory UK point out. You may no longer satisfy the lending criteria of the lender, for example, and although you may avoid any early repayment charge, you may need to borrow more money – and at a higher rate!
Getting help and advice on transferring a mortgage
It could be the ideal solution, especially if you are porting a mortgage that has a very low fixed rate, for example – but don’t assume that your lender will automatically agree. To find out if your mortgage deal is worth transferring to your new home, make an appointment today with one of our mortgage advisors.
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