What is Porting a Mortgage?

Buying and selling homes is difficult.

There is marketing and negotiations and house sales can fall through.

Owning homes isn’t always straightforward, either.

Homeowners circumstances or plans can change.

This is where porting a mortgage comes in.

But what does this mean? And how does it work?

Read on to find out.

What is porting a mortgage?

Porting a mortgage means transferring your existing mortgage to a new property.

When you take out a mortgage, you agree to payments for a specific property over 25-30 years.

But you may want to move before paying off your mortgage.

This is where porting a mortgage comes in.

In other words, you don’t need to pay off your current mortgage and take out a new one. Instead, you can move your existing mortgage over to the new home.

Porting vs. remortgaging

Porting transfers existing mortgages (including interest rates and terms) to new properties. Remortgaging involves new mortgages (and rates and terms) to new or existing properties.

Porting only requires requalification for extra borrowing needed. So, it is a quick process. Remortgaging means going through a full underwriting and approval process. This process can take more time.

Porting is usually motivated by wanting to move house. Remortgaging might be done for several reasons, such as:

And more.

Reasons to port a mortgage

1. To keep your existing interest rate

One of the main benefits of porting is that you get to keep the same mortgage rate.

Rates might have increased since you took out your original mortgage. So, it can save you thousands of pounds.

2. Avoid penalty fees

Suppose you pay off your current mortgage upon moving.

In that case, there may be early repayment penalty fees. Porting the mortgage to your new property allows you to avoid these.

Most lenders allow you to port your mortgage. But you should check the specific terms first.

But in most cases, there are no fees or penalties. After all, you are not terminating the original agreement early.

3. Faster alternative to getting a new mortgage

Taking out a new mortgage when move home can be time-consuming and frustrating.

There is a lot of paperwork, underwriting, and waiting involved.

Most of this work is not repeated for mortgage porting. So, it’s a faster and simpler process than starting over with a new application.

4. Increased borrowing

Your new property will often costs more than what you paid for your existing home. Porting means you only have to qualify for the difference in borrowing amount.

For example, say your current mortgage is £200,000 and your new home costs £250,000.

In this case, you only need to qualify to borrow an extra £50,000 rather than the total £250,000 loan amount.

It is much easier to get approved for this smaller amount.

Advantages and disadvantages of porting a mortgage

Advantages

Maintain your locked-in interest rate.
Avoid mortgage penalty fees.
Much faster process than getting re-approved.
Only requalify for extra borrowed amounts.
Continue your current mortgage where you left off.

Disadvantages

Your lender might not allow porting.
Limited to porting with the same lender.
Extra fees may apply (appraisal, legal, etc.)
You may need to qualify for additional borrowing.

Key questions before porting a mortgage

Key questions to answer before you port a mortgage are:

Will my lender let me port this mortgage?
Will keeping my rate save me money in the long run?
How much extra will I need to borrow and qualify for?

Clarifying these issues will help you determine whether porting is your best move. Or whether you would be better off with a remortgaging or getting a new mortgage.

The steps involved with porting a mortgage

Find your new home first

You cannot start the port until you have accepted an offer on your new property.

Lenders need all the details and paperwork about the latest home. Only after receiving this can they begin the mortgage transfer.

Confirm eligibility with your lender

Connecting with your mortgage lender early on is critical.

They can check your specific loan and account details to see if you qualify to port. This pre-approval of your eligibility gives you confidence as you home shop.

Understand any extra fees

Sometimes, extra appraisal, legal, or administrative fees are involved in porting a mortgage. Get all estimates and costs in writing from your lender upfront so you know what to expect.

Get approved for any additional borrowing

When applying for additional borrowing, you will undergo extensive:

Credit checks
Affordability assessments
Verification of your current income and debts.

The lender wants to ensure that you can truly afford to repay the larger mortgage amount. So, expect to provide recent:

Payslips
Bank statements
Details on all your monthly obligations.

You will also have your credit score reviewed. And underwriting will likely be as rigorous as for your original mortgage.

Complete necessary paperwork

The paperwork involved with porting can often seem endless.

In addition to the updated titles, transfers, and registrations, you must provide:

Property appraisal information
Updated identification
Verification of your current mortgage details
Payment history
Comprehensive personal financial records
Tax documents
Evidence of homeowners insurance
Recent bank statements.

You may feel like you are applying for a mortgage again. So be as organised and communicative as possible during this documentation process.

Keep copies of everything you submit. And stay in close contact with your lender so there are no surprises or delays.

Officially transfer the mortgage

Once approved, your lender transfers everything to your name at the new address.

Terms, interest rate, and other details remain unchanged except for any increased principal.

Register your new home

The last step is handling the legal registration, title, and deed. This is to get all housing records updated.

Until this process is complete, your port has not been finalised. So stay engaged for updates and final approval.

In some cases, even if you are initially cleared for the port itself, there can be last-minute issues. This happens if any red flags come up with the new home.

So, ensure you have a contingency plan in case your port falls through at the eleventh hour.