How Does Porting A Mortgage Work? (And How It Differs From Transferring A Mortgage)

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Porting a mortgage is when you move your current mortgage deal with your existing property to a new property. This involves paying off your old mortgage and then taking out a new mortgage deal with your existing lender whilst keeping the exact same terms. Here, you get to avoid all the legal fees and hassle of finding a mortgage lender that’s willing to give you a new mortgage loan.

Of course, if your current property is worth less than the new property, your existing mortgage deal would need altering so your new mortgage deal better reflects the value of the home, but these are just minor adjustments.

Porting a mortgage and transferring a mortgage deal are two different things, but throughout our post today we’ll highlight these differences and help you understand the circumstances in which both options may be useful to you.

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What Is ‘Porting A Mortgage’?

Porting your mortgage means you pay off your existing mortgage and then take out a new one, with the same terms and with the same lender, on a new property. You port your mortgage deal to your new property and essentially get credited for the payments you’ve already made towards the old mortgage and your outstanding mortgage will go towards the cost of your new property (additional borrowing may be necessary to cover the full cost).

Whilst you will be taking out a new mortgage here, it’s far less work than if you were finding a completely new mortgage lender and deal yourself, and lenders will usually give you favourable terms for staying with them, which may be better than their current deals being offered to new mortgage customers.

Are All Mortgages Portable?

Most are. We realise that isn’t particularly helpful, but it all comes down to the exact terms and conditions of your specific mortgage deal that you signed. Check with your mortgage lender to see if your mortgage is portable before making any new plans for a new property deal.

Can I Port My Mortgage?

Of course, the first step is checking if it’s possible for you. It more than likely will be, but that doesn’t mean you’re out of the woods just yet – there are several possible obstacles you’ll have to navigate before you successfully port your mortgage:

You Might Not Meet New Lending Criteria

Just because you were successful in your mortgage application the first time around, doesn’t mean you will be so again.

It’s a sad fact in the mortgage world that a lender’s criteria for lending can be different from one month to the next, meaning just because you qualified for your first mortgage, doesn’t mean you will qualify for it again because their criteria may look different now.

Even if the lender’s criteria hasn’t changed, your circumstances might have done. This could lead to you failing to meet the relevant standards for lending, and you might be left having to stick with your current property, find a property that’s worth less, or be forced to wait a few more years until your mortgage balance is reduced (but you might still not qualify even years later because the goalposts are always moving with mortgage lenders).

You Might Not Be Eligible For A Higher Loan

It’s highly unlikely that your new property will be the exact same value as your old one, and when that happens you will have to apply for a new mortgage that’s worth more.

The problem here is, you don’t know for sure exactly how much your mortgage lender would be willing to lend you. You might already be close to the maximum they would be willing to lend you, meaning you’re not eligible for the new mortgage deal, and therefore can’t afford, in your lender’s eyes at least, your new property.

You Might Need Two Loans

When you port your mortgage, the chances are you will need to lend more in addition to the mortgage you have ported to cover the cost of your new mortgage. 

Usually the additional borrowing will be taken out as a new mortgage product and deal, meaning you won’t enjoy the same terms as the mortgage you have ported. This could mean higher interest rates and less favourable conditions for you. This also means you’ll have two mortgages to your name – each with different terms, and each with different payback periods. 

Considering the pros and cons of this will be integral to decide if two mortgage products are right for you. Speak to mortgage advisors and specialists to be sure you’re making a decision that’s right for you.

You May Have To Accept A Worse Deal

Porting your mortgage usually means keeping the same mortgage terms and conditions. If interest rates are particularly favourable with your current mortgage, then you might be reluctant to accept a completely new deal with worse conditions for you – but you might have no choice.

If you’re changing the conditions of your borrowing as the borrower, then it’s reasonable for your lender to change the conditions of their lending.

Whilst your lender may be happy to port the mortgage, if you’re heading to a property with a higher value, and are therefore requesting a higher mortgage, then you might have to accept a new deal with less favourable conditions than your current one.

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What Are The Benefits Of Porting A Mortgage?

Whilst the above might sound as though we’re trying to put you off porting your mortgage – this couldn’t be further from the truth. It’s an excellent option for many homeowners and it can move them towards a more enjoyable property ownership experience because they’re in a home they love.

But it’s important that you’re aware of the barriers to porting your mortgage, so you aren’t caught out during the process.

With all that said, there are a number of key benefits to porting a mortgage loan, and these are important to keep in mind, too:

  • Money saving option in many circumstances because often fees will be waived by your current lender
  • Convenience of staying with your existing lender
  • Can often stick with your current mortgage agreement, which may be better than deals currently being offered on the mortgage market today
  • Less work involved – as you won’t have to look at all your options on the wider market and instead focus on the deal being offered by your current lender
  • Less paperwork – your lender already knows everything they need to know about you, so any paperwork requested will likely be much less than if you were applying for a new mortgage with a new lender

Borrowing More vs Borrowing Less

The chances are you won’t be porting a mortgage to a property of equal value – as in most cases it’s a desire to up or downsize that drives the decision to port the mortgage to begin with.

It’s usually much easier to understand porting when you look at the numbers, so we’ll work through all three possible scenarios below to help you understand how porting might look.

Borrowing More Example

When you’re borrowing more than your current mortgage to cover the cost of a new property with a higher valuation, you’ll usually be able to carry over the exact deal you have for the amount remaining on your current mortgage – but the extra will need to be taken out as a separate mortgage product to cover the difference, and this will usually carry different terms and interest rates because the loan to value ratio will be higher than your previous mortgage.

Here’s how it may work:

Current Property Valuation: £170,000
Current Mortgage Balance: £120,000
Current Property Equity: £50,000
New Property Valuation: £250,000
Ported Mortgage Amount: £120,000 (using the previous deal terms and conditions)
Additional Borrowing: £130,000 – £50,000 equity = £80,000 (subject to new terms and conditions)

Borrowing Less Example

Things are slightly different when you’re moving home to a property that is actually worth less than your current mortgage amount remaining – this will usually result in early repayment charges due to you changing mortgage conditions in a way that negatively affects the lender.

Borrowing less when you port a mortgage might look like:

Current Property Valuation: £250,000
Current Mortgage Balance: £200,000
Current Property Equity: £50,000
New Property Valuation: £200,000
Ported Mortgage: £150,000 (due to £50,000 equity in old property)
Possible Fees & Charges: Early repayment charge on the £50,000 equity for the reduction of the mortgage loan

Like For Like Example

Things are much simpler when porting for a mortgage of the same amount – everything remains the same with no additional borrowing or fees.

Current Property Valuation: £150,000
Current Mortgage Balance: £100,000
Current Property Equity: £50,000
New Property Valuation: £150,000
Ported Mortgage: £100,000
Deal: Your current deal remains the same with no additional borrowing or fees

How Do I Port My Mortgage?

Once you’ve found the property of your dreams you’ll want to approach your mortgage lender to discuss the possibility of you porting your current deal to the new property – as well as iron out any differences in property prices that may mean you need to borrow more or less than your current mortgage amount.

You will need to first apply for a Decision In Principle to get an idea about where your lender stands and from there you’ll have to explore the deals being offered by your lender.

Speak with a mortgage advisor to ensure any new deal is right for you.

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What Is Transferring A Mortgage? (And How Is It Different?)

Transferring a mortgage is NOT the same as porting one. Here, the aim is to transfer the mortgage to a different person, not property. This might be necessary if you’re in financial trouble but don’t want to miss payments and negatively affect your credit score, but would like the property to stay with someone close to you – such as a family member. Or when you are married and have a joint mortgage, but are going through the process of divorce and want one partner to become solely responsible for the property’s mortgage repayments and ownership.

This is known as a transfer of equity process, which essentially means you completely transfer ownership of the property to another person.

Not all mortgage products will be transferable, so, again, you’ll need to check with your lender to see if it’s possible for you.

Transferring and porting mortgages are often confused and used interchangeably but they’re very different processes used for very different purposes:

  • Porting involves moving a mortgage deal to another property.
  • Transferring involves moving a mortgage deal to another person.

Porting Your Mortgage: Summary

Deciding if porting a mortgage is a good idea or not will largely come down to individual circumstances and the deals being offered by your current lender at the time. Explore your options and use mortgage advisors to ensure you’re making the right move. 

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Emma Jones
Emma Jones
Emma began her career in Lloyds Banking Group, first in the unsecured & secured loans department at Halifax and later as a mortgage advisor at Lloyds. During 9 years in these roles and a further 2 years at Yorkshire Building Society, Emma was able to observe the impact of the recession, and how the banks let their customers down by denying loans and mortgages. Wanting to be a driving force for change, she stepped into a market advice role where she has been able to help clients when others couldn’t. Identifying a gap in the mortgage space, Emma went on to establish When the Bank Says No. As a keen property investor, she has been the focus of features in publications including The Sunday Times and This is Money. Emma’s greatest joy is overcoming the low expectations of their customers, many of whom have all but given up on getting a mortgage due. One thing Emma has learned through her own personal struggles is every client must be treated like a human and understood better by advisors and lenders in the industry. “We all have to navigate life events which can ultimately impact your financial status. It shouldn’t mean dreams of homeownership or business growth should have the breaks applied”. Emma and her team’s passion for helping people overcome the challenges they may face when applying for a mortgage have fuelled the success of When the Bank Says No.