What is porting a mortgage?

Mortgage porting is where you transfer an existing mortgage scheme from one to the other, when buying and selling a property.

If you need to borrow any additional funds when porting, you will still have one mortgage on the property. The difference being that the lender will split the loan internally on different rates, one being the ported rate from the original mortgage, and the other being a new rate as available at the time.

Not all mortgages are portable but if yours is, your application is still subject to the lender’s criteria at the time.

How does porting a mortgage work?

Firstly, you’ll need to find out if you can port your mortgage, i.e., is your scheme portable?

How do know if I can port my mortgage?

This will have been highlighted to you when you took out the current product. If unsure, it will be set out in your original illustration and mortgage offer.

Secondly, you must establish if what you are looking to do, qualifies for your scheme to be ported. So, in what situation would you port a mortgage? This would be where you are looking to sell a property and purchase another. By transferring your current rate, it should avoid you having to pay any early repayment charges (ERCs) that may apply.

To port your mortgage involves a very similar application process to any other property purchase. The only difference is that you need to factor in the current balance on the present rate when looking at the figures.

You may also find that the mortgage illustration and offer are slightly more in-depth. This is due to it covering the terms and conditions of the current scheme being ported and the scheme for any additional borrowing where applicable. The mortgage payment quoted will also be broken down for each part where applicable. Ensure you are clear on what the total amount will be each month.

Finally, just because your mortgage is portable does not mean that it is  guaranteed you can do this. Your application will still have to be approved by your existing lender taking their current criteria into consideration. They are well within their rights to refuse your application if they have just cause.

What should I consider before porting my mortgage?

There are a few things for you to consider before porting your mortgage and some that your lender will require. Some of these are:

• Your credit score. Is your credit history giving you the best opportunity to be approved? They can still decline your application if not, especially if you are looking to increase the loan size and/or loan-to-value.
• Your employment status. Have you recently changed your employment? This could impede your chances, especially if you have recently become self-employed with less than two years’ worth of accounts.
• Your affordability. You may be paying your current mortgage, but you’ll still need to satisfy the lender of this continuing if you move. This could be an issue where you are buying something bigger, and affordability is already stretched based on their calculations.
• The property. Not all properties are mortgageable. A lender will not allow a mortgage to be ported if the property is not adequate security.
• Is it the right course of action financially? Just because this may save you an early repayment charge, it may not be the best financial option for you. Take all costs and rates into consideration when considering if porting is best.

Advantages and disadvantages of mortgage porting

What can I do if I can’t port my mortgage?

It may be that you cannot port you mortgage. This could be because your scheme is not portable or your lender will not approve your application. If this is the case, these are your possible options:

• Delay your move until any early repayment charges, where applicable, expire.
• Arrange your new mortgage on a completely new deal. This could even be with the same lender if your current scheme is not portable. This will involve having to factor in any early repayment charges where applicable.
• See if by changing your loan amount requested your lender will approve your application. If the risk is not increased for the lender following your move they may give exception to their usual criteria. Note that this will only be possible if your current scheme is portable.

Is porting my mortgage a good idea?

This very much depends on your personal circumstances. Things to take into consideration are:

• Is this best financially? Is it more cost effective to port the current scheme and save on any ERC? Or is it better to pay the ERC, taking into consideration the current rates available to you?
• How long do you have left on your current scheme? Does this period suit your needs? For example, do you have one year left on a fixed rate but want the security of a longer term fixed? If so, coming out of the current deal may be best advice.