Choices on moving home
When you move home, you may have the following options, and you need to consider carefully which is right for you:
- Porting your mortgage with your existing lender, possibly borrowing any additional amounts via a separate, new mortgage deal
- Taking out a new mortgage deal with your existing lender to completely replace your existing mortgage
- Taking out a new mortgage deal with a different lender to completely replace your existing mortgage
Where do you start if you want to move your mortgage?
If porting is permitted, and you decide you want to keep your existing mortgage, then you need to go and see your lender.
Porting won’t automatically happen so you’ll need to chat through your situation and then your lender will carry out a re-assessment of your financial circumstances at this stage. It’s a very similar process to applying for a brand new mortgage, so you may undergo a rigorous affordability and credit assessment.
You may have noticed that lenders’ criteria have become much stricter in recent years due to, amongst other things, the introduction of the regulator’s Mortgage Market Review so they do want to review a lot of details to make sure you can make the repayments.
If your outgoings or other debts may have changed since you took out the mortgage, these could also affect your chances of being allowed to port. Any missed payments on your current mortgage deal might mean your application to port is rejected.
In the event that you need to borrow more upon porting as your new property is more expensive, then you have a couple of options. Your lender will consider whether you can afford to pay more in repayments every month. You then may be allowed to increase your existing mortgage or you may be asked to borrow the extra money via a separate mortgage.You’d then need to pay any arrangement fees and will effectively be making repayments on two mortgage deals simultaneously so you’d need to decide what works best for you.
Alternatives to porting – can you transfer your mortgage to another bank instead?
As we have already seen, porting can be a great option to have on your mortgage, but are there any other options you could consider?
The alternative is essentially to take out a new mortgage with a different lender, which is known as re-mortgaging. You would use the new mortgage amount to pay off the old mortgage in full and even have some to spare for home improvements.
However, this may not be suitable as your existing lender may force you to pay early repayment charges in these circumstances. Early repayment charges are usually payable in the early years of a mortgage deal, and are often linked to the period for which the mortgage rate is discounted, capped or fixed. If you are considering switching lender, then you need to find out if there are any early repayment charges on your existing deal, and if so, how much you would need to pay. These charges could be as much as 5% of your outstanding mortgage amount, especially if the deal is in its first couple of years.
Almost every mortgage deal also requires you to pay an exit fee on termination, which is typically a few hundred pounds.
It’s then important to weigh up whether the exit fees and early repayment charges make it worthwhile moving to a new mortgage.
Remember also that if you take out a new mortgage deal, you could have to pay arrangement fees on that deal – so factor those into your calculations.
What if I can’t port and can’t get a replacement deal?
As we have seen, your mortgage may not include a porting facility, and if it does, the lender is not obliged to approve your request. If you can’t port your mortgage, and you can’t find a new lender to accept you, then you may need to stay put until you can prove to the lenders that you are able to keep up with the repayments and you can either port your mortgage or take out a new one. Find out how you can help yourself get approved here.
So if you want to have a look at what offers are out there to compare before you port, why not have a look at our mortgage tables to see if you can find the right mortgage deal for you?