Increasingly, portable mortgages that you can take with you when you move house are becoming more common. If you’re looking to move, porting a mortgage may be an alternative option to remortgaging your home. Explore our home mover guide below to find out more about portable mortgages and compare the best mortgage deals with our comparison tool.
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Many mortgages today are portable, meaning they can be moved from your current property to a new home. It’s not always a straightforward process, though: lenders will want to value the new property, you might be charged a fee to port the mortgage over, and you may have to pass another affordability check to move home with the same mortgage.
A portable mortgage is one that can be moved from one property to another – sometimes for a fee and sometimes for free, depending on your mortgage agreement. If you’re keen to take your mortgage with you when you move house, your first port of call should be to talk to your mortgage lender or mortgage broker to confirm that your mortgage is portable, whether you’re considering porting a mortgage to a cheaper house or not.
If porting your mortgage and borrowing more money to afford a new property is your aim, it’s then time to ask your lender what rate you’ll get.
In general, your loan-to-value ratio (LTV) on the new property will play the largest role in deciding whether you qualify for the lowest interest rate. So, hopefully you will have built up some positive equity in your current home (provided its value has gone up) and can use that to reduce your LTV.
The lender’s next step will be to value the new property to ensure there’s enough security for the amount you now want to borrow. You will probably have to pass a stringent affordabilitycheck too, especially with Brexit looming and the continuing Covid-19 pandemic making lenders more cautious.
If you go ahead with moving house with your mortgage, you’ll then usually be charged a few hundred pounds in administrative fees. This is standard practice and should work out a lot cheaper than paying the set-up fees to move to a totally new deal - a process called remortgaging.
Generally speaking, porting a mortgage is usually easier and faster than remortgaging – but as you can often get a better deal by remortgaging, it is always handy to use a mortgage calculator when moving house to check the going remortgaging rates.
Not all mortgages are portable. If you cannot port your mortgage to your new property and are still within your fixed or discounted rate period, you will most likely have to pay an early repayment charge (ERC) – usually between 1% and 5% of the outstanding debt – as well as an exit fee.
If you’re now out of your promotional period and on your lender’s standard variable rate (SVR), or are on a flexible deal such as a Lifetime Tracker, you will probably only need to pay an exit charge, not an ERC.
Exit charges vary from lender to lender, but you can usually expect to pay a few hundred pounds. Some lenders ask you to pay this upfront when you first take out the mortgage, so do check with your lender to make sure you don’t end up paying twice.
ERCs, also known as early repayment penalties, must have been clearly outlined in your contract when you first took out the mortgage, otherwise you may have grounds to claim it back or complain to the Financial Ombudsman as per the Financial Conduct Authority’s Mortgage Conduct of Business (FCA MCOB) rules.
If you go down this route, you will need to go through the entire process of getting a new mortgage. First, work out how much equity you have in your current home and whether you have any additional savings to add to the pot. Then calculate how large a mortgage you need for the new property. This will give you the LTV, and with that you can start researching online for the best interest rates. Be sure to keep an eye on the total cost of a new mortgage, as some lenders pair low interest rates with high set-up fees.
The next step is talk to a mortgage broker, who will take all of your information and hopefully find you an even better deal. It’s worth noting, however, that some banks, including First Direct and Yorkshire Bank do not use brokers. So if you’ve seen a more suitable deal with one of them, you might be better off going direct.
While remortgaging might get you a lower interest rate – thus potentially saving you thousands of pounds in interest repayments – you will almost certainly face more fees and charges than if you simply port your existing mortgage.
Most mortgage deals come with arrangement fees of around £1,000, and if you break the terms of your existing mortgage, you could also face thousands of pounds in early repayment charges. So, don’t forget to talk to your current lender to find out how much you’ll be charged for exiting your mortgage early.
Then use a moving house mortgage calculator to work out whether remortgaging to a new deal will save you more than porting your mortgage - or vice versa.
In recent years, the affordability tests performed by mortgage lenders have become more in depth. If you are porting your mortgage and need to borrow more money, or remortgaging to a totally new mortgage, the lender will analyse your finances very closely.
Much like when you first took out your mortgage, the lender will ask lots of questions about your current financial situation and assess whether you could still afford mortgage repayments if, for example, you had a baby or took a career break. Ultimately, even if your financial situation is the same or better than when you got your current mortgage, the affordability test could result in your mortgage application being rejected.
This is particularly true in the current climate when there is a lot of continuing uncertainty due to both the Covid-19 pandemic and Brexit at the end of the year.
If that happens, it is worth approaching a mortgage broker as he or she should be better placed to match you with a lender who will accept your application.
Other options include applying to another lender (although this could hurt your credit score if you are rejected again); trying to improve your financial situation; or stay put and renovate your current home to build up more equity to use as a deposit on a new one.
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Last updated: 12 January, 2022