Transferring a mortgage to another home is otherwise known as “porting”. Whether you can do this or not depends on the lender’s terms and the specifics of your policy. There are many scenarios in which you may want to port your mortgage, including moving house, or upgrading to a bigger home. As a general rule, if you ask your mortgage lender, can I transfer my mortgage to another property, then they should be able to give you clear information that you can use to make an educated decision.
There are numerous factors that will influence whether or not you can carry out a mortgage transfer, such as the current fluctuations in the property market, your mortgage lender requirements and current mortgage rates.
Understanding Mortgage Porting: Mortgage porting lets you transfer your mortgage to a new property, avoiding early repayment charges and possibly retaining favourable interest rates.
Lender Criteria: Each lender has specific requirements. Be prepared for affordability checks, a property valuation, and lender approval, as if applying for a new mortgage.
Benefits of Porting: Porting can help you keep advantageous mortgage terms, save on fees, and simplify the process of moving to a new home.
Potential Drawbacks: Reassess your financial situation since porting requires re-qualification. Market conditions and borrowing limits could impact your decision.
Alternatives if Porting Isn’t Possible: Consider remortgaging or switching lenders if porting doesn’t suit your needs.
Costs and Final Considerations: Factor in potential fees, like valuation and administrative charges. Assess whether it’s more cost-effective to transfer your mortgage or take a new one.
So, what does porting mean? Most of the time, porting is synonymous with transferring. It involves you moving a mortgage to a new property, without closing it. Most mortgages are portable, but a lot of the time, they are subject to approval from your lender. If you port your mortgage, you will have to apply for it as if it’s a new loan.
Your mortgage lender will first assess your mortgage portability, to make sure that it aligns with their lender criteria. They will then talk you through the transfer of mortgage terms and conditions, so you’re aware of the legalities of the process.
When these steps have been completed, you can then begin the process of porting your mortgage.
Porting often involves you having to apply for a mortgage as if it’s a new loan. Your lender will conduct affordability checks, conduct a property valuation and carry out the mortgage approval process. When you have obtained mortgage provider approval, you will then be allowed to move the mortgage you have now, to a new property. While porting is very common terminology, it’s important to understand that the essence of it is transferring the financial product you have now, to a new home.
Not every mortgage is portable, and every product is subject to lender approval.
One thing to take note of is that every lender will have a different set of lender criteria when assessing your mortgage transfer. This includes assessing your income, carrying out a property valuation and determining your affordability. It's common for some fixed-rate mortgages to come with terms that stop them from being ported, so before you move forward, it’s helpful to check things like this.
Even if you do have the option of being able to transfer your mortgage, the lender may still perform a full credit check and mortgage affordability assessment. This is done as if you were applying for a new mortgage entirely, so if your situation has changed, this could influence the outcome.
Even though porting your mortgage may mean that you need to undergo a full credit check and affordability assessment, there are some key benefits to initiating the process. This is especially the case for those who have favourable mortgage rates or those who want to avoid extra fees.
If your current deal has a favourable interest rate, then transferring it to another property may be far more beneficial than taking out a new mortgage. Porting your mortgage can also help you avoid huge early repayment charges that would apply if you happened to break your contract.
Other benefits include simplicity. For some, transferring their mortgage is much more straightforward than having to apply for a new deal. It also greatly reduces the administrative paperwork.
With everything, where there are pros, there are always cons. Although porting a mortgage can give you numerous benefits, such as keeping your fixed rate or avoiding paperwork, you do need to re-qualify. Your lender may need to carry out a mortgage assessment, which helps them to analyse your financial situation as a borrower. If you’re moving to a bigger property, it may be that you need to borrow additional funds, which will result in you taking on a new mortgage at a different rate.
If market interest rates are higher, porting your mortgage may also not be the best option, as you’ll be paying more than you probably should be for your home. This, combined with possible borrowing limits can impact the mortgage deals available. In situations like this, it could be worth taking out a new deal entirely, as it means you can choose another mortgage provider and possibly secure a lower interest rate for the full amount of your property purchase.
Even though fixed-rate mortgages can be transferred, they are often subject to lender approval. You will also have your current financial situation reassessed. When a bank assesses your mortgage eligibility, your gross income will always be a primary factor. The lender will look at things like your salary, bonuses and additional income sources. Stable employment is also favourable, so if your employment history hasn’t been consistent in the last few years, this could impact whether or not you can port your mortgage.
Banks will also assess your deposit amount and debt-to-income ratio. Even if you can afford the repayments on your ported mortgage, the banks will have to take into account current interest rates as well, and how this might go on to affect your repayments.
If you don’t have the transfer approved, you may also face potential costs, such as early repayment fees and mortgage penalties. When you port a mortgage, you avoid ERCs, or early repayment charges as you are continuing your deal with the existing lender. If you have to seek a new deal, however, repayment charges may apply.
If you want to navigate situations like this, then the best thing you can do is make sure that you time everything properly. If you have fixed-term mortgage deals that are coming to an end, then you need to weigh up whether you should do a fixed-rate mortgage transfer or whether you should seek a new deal entirely.
If you want a clear breakdown of how to transfer your mortgage to another property, then here you’ll find out what steps you need to take.
The first thing you should be doing is taking the time to check with your lender. You need to check to see if the mortgage can be transferred and to find out if there is anything in your mortgage terms that could impact the transfer. Checking with your lender first is the best way to avoid expensive mistakes later down the line.
Your lender must make sure that you can afford the mortgage you are applying for. Even if you are porting a mortgage, you will still need to undergo several affordability checks. Your lender will assess your income, employment and credit score. If there is an issue, it will be flagged. A lot of the time, if there is a problem, this doesn't mean that your application will be rejected. Sometimes it’s just a case of sorting paperwork, updating details or providing additional proof of employment. If you are successful when undergoing affordability checks for your mortgage then you will move on to step three.
Step Three: Property Valuation
When buying a new property, you need to make sure that it’s been valued. The lender will use this value to make sure that it meets their criteria. If everything goes smoothly with the property valuation process, then you will be allowed to submit your application formally.
If you have been approved, you will then go through the legal process to transfer your mortgage. It may be that you need to hire a solicitor to handle the paperwork for you. They will also handle the legal aspects of the transfer for you, making sure everything goes as planned.
During the completion process, all paperwork will be finalised and your mortgage will be ported to the new property. At this point, you can then complete the process of buying your new home.
Even though porting a mortgage involves you going through the mortgage application process again, the benefits often outweigh the cons. With that being said, it never hurts to be prepared.
In the unfortunate circumstance that you can’t port your mortgage, it helps to explore alternative options. One of them would be switching to a new mortgage.
Applying for a new mortgage allows you to go with a different lender, which can sometimes result in getting a better deal. You may also have the option of applying for a different mortgage with the same lender if porting is not an option.
If switching, you may be faced with early repayment charges. This is usually the case if you try to move during your fixed rate. The amount can vary depending on the lender you have gone with, and your mortgage agreement.
It may be that you repay a percentage or a fixed fee. Some lenders use a tiered system, where the charge decreases, the longer you stay with the lender. Factoring into account early repayment charges is key if you want to avoid surprises later down the line.
You can also remortgage if you feel as though this would benefit you. You can either consolidate your debt, or you can try and access more favorable terms if you are unable to transfer. New mortgage deals come up all the time, and if you are facing early repayment penalties then it may be that remortgaging is beneficial in certain situations. Find out if you need a solicitor to help you with the remortgage process.
When you move home, there are numerous costs associated with transferring your mortgage. Early repayment charges are a very big consideration. Although transferring your mortgage is often the best way for you to avoid charges like this, it’s important to know that partial repayment or even failure to transfer could trigger fees like this. You also have exit fees. Some lenders may charge you an exit fee if you happen to transfer the mortgage.
Some lenders have a tiered system for charges, which means the longer you have your mortgage with that provider, the less you pay to move. Others have a set percentage of your total mortgage, and some have a fixed fee irrespective of your mortgage amount.
You will also have to factor into account valuation and administrative fees. Property valuation fees exit fees and associative costs can add up quite a lot. You also have property valuation costs, and if you’re on a budget, things like this can play a key role in your mortgage as a whole.
So as you can see, whether or not you transfer your mortgage will come down to your financial situation. You also need to consider whether it is worth considering a new mortgage altogether. Pros of porting your mortgage include being able to avoid early exit fees and the potential for additional borrowing. On top of this, you can also maintain your existing interest rate, which if you have a favourable rate, can be very beneficial.
Taking out a new mortgage could be the way to navigate market conditions, and it could also be the best option if your financial health isn’t as strong as it once was.
If you want advice regarding your mortgage comparison, or if you are seeking solicitor advice then we strongly encourage you to get in touch with us today. Here at Tilly Bailey & Irvine Solicitors, we are proud to say that we have years of experience when it comes to navigating the property market, and we can easily help you with your transfer.
