I’m on a Fixed Low Interest Rate, Can I Port My Mortgage Over to My New Home?

Couple with moving boxes

Let’s talk about one of the most common dilemmas that many homeowners face when they decide to move – can you transfer your existing mortgage to a new property? When you’re fortunate enough to still be fixed into a low interest rate, this question becomes incredibly pertinent and is one frequently asked by our clients.

The process of transferring a mortgage from one property to another is called ‘porting’. This allows homeowners to keep their existing mortgage deal, even if they are on a fixed low interest rate, when they move homes. This is something we at HLC Mortgages can help you with, you won’t even have to contact your current lender, as we can help you through the whole process, as well as ensure it’s the best option for you! Let’s look at how this works in practice.

Understanding Mortgage Porting

Essentially, porting a mortgage means you can ‘take’ your existing mortgage deal with you when you move to a new home. This can be particularly attractive if you’re currently on a deal with a low interest rate, or if you’re tied into a fixed-term deal where you would face penalties for changing mortgages.

It’s important to remember that porting a mortgage isn’t a guaranteed right – it’s subject to the lender’s agreement. The process essentially involves applying for the mortgage again, and your lender will reassess your circumstances based on current criteria.

When is Porting a Good Idea?

If you’ve got a mortgage with a low interest rate, especially if it’s lower than the current market rates, porting your mortgage might seem like an absolute no-brainer. However, this might not always be the case.

Porting makes the most sense when you’re mid-way through a deal with early repayment charges (ERCs). These charges can be substantial, sometimes a percentage of your outstanding mortgage. In this scenario, porting can save you a significant amount by avoiding these charges.

If you’re enjoying an exceptional interest rate that you’re unlikely to get elsewhere, then porting could be a sensible option. However, bear in mind that if you need to borrow more to afford your new home, that additional borrowing may be at a higher interest rate.

The Process of Porting

Now that you understand what porting is and when it might be a good idea, let’s discuss the process. When you decide to port your mortgage, you will need to go through an affordability assessment with your current lender. They will consider your financial circumstances, your income, and your outgoings.

Once your lender has agreed in principle to the port, they will instruct a valuation on the new property. This is to ensure the property is a good risk and worth the amount you wish to borrow.

If everything goes well, your lender will provide a ‘Mortgage Offer’ that outlines the terms of the ported mortgage. This offer will confirm that you can port your existing deal to the new property, and outline any additional borrowing and its associated rates.

Things to Consider

As with all financial decisions, porting a mortgage has its pros and cons. It’s essential to weigh these up and consider seeking advice from a financial adviser or mortgage broker.

  1. Costs: Even if you’re porting your mortgage, there could still be costs involved, such as valuation and legal fees. If you need to borrow more, there could also be arrangement fees for the additional loan.
  2. Affordability Checks: If your income or credit rating has decreased, or if your lender’s criteria have tightened, you may not pass the affordability checks for porting, even if you’re a current customer.
  3. Additional Borrowing: If you need to borrow more for your new property, your lender may require this to be a separate loan with its own rate and term. This could end up costing you more in the long run.

To conclude, porting your mortgage could be a savvy move if you’re on a great rate or are looking to avoid hefty ERCs. But remember, your suitability will be reassessed, and there are costs to consider. Always think through your options carefully, and don’t hesitate to get professional advice if you’re unsure. Remember, you do not need to go back to your current lender yourself, we can help you through the entire process and check whether it’s the right option for you.

Whether you’re upgrading to a family house, downsizing for retirement, or simply fancy a change, don’t let the complexities of mortgages deter you from your dream home.

If you’d like further advice on porting your mortgage, or help with finding an alternative mortgage option, contact one of our friendly advisors now.

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