Porting your mortgage

Find out how portable mortgages have been affected by affordability rules and whether you can - or should - take your mortgage with you when you move.

Key points

  • Porting means repaying your existing mortgage and then resuming it on the same terms after you move
  • Affordability rules mean you may have to reapply for your mortgage and be subject to different terms
  • If you port your mortgage to a more expensive property, you may have to take out additional borrowing at a higher rate
  • If you port to a cheaper property, early repayment charges may apply

Moving home can be a stressful time, and that's before you consider what to do with your mortgage.

Whether you decide to take your current mortgage with you - a process known as porting - or get a new deal, the choices can be confusing and sometimes you may not be able to move your mortgage.

What is a portable mortgage?

A portable mortgage is one that can be transferred from your current property to the one you're buying next.

Although the process is often simplistically described as taking your mortgage with you when you move, porting actually means repaying your existing mortgage on the sale of your current property, and resuming the mortgage on the same terms with your new property.

"Having the option to port a mortgage is certainly better than not and most deals will be portable," said David Hollingworth of London & Country.

"That can be particularly important to those who foresee a house move on the horizon that would still be within the current mortgage deal's early repayment charge period."

Try our mortgage calculatorShould I port my mortgage?

Whether or not you should port your mortgage depends on a number of factors, but if you're not tied in to your current deal by early repayment charges it could be a good idea to look around at alternative options.

Fees and charges

"Being able to port your current mortgage to the new property avoids the need to redeem the mortgage and as a result does not incur any early repayment charge," said Hollingworth.

"If you decide not to take your mortgage with you or if your mortgage isn't portable, you might end up paying a number of fees.

"Given that these can amount to thousands of pounds, being able to port is a significant benefit."

An early repayment charge will probably be payable if you're still within your mortgage's initial deal term. The amount of this fee varies, but it can be as much as 5% of the remaining debt.

An exit fee may also be payable, which can be a few hundred pounds. This is sometimes payable when you switch to a new mortgage.

What many don't realise is that lenders will still assess the borrower's situation when porting, even when they are not taking any additional borrowing

Finally, there may be fees to pay to take out a new mortgage on the property you're buying.

Time remaining on mortgage deal

Whether you want to move your mortgage will also depend on the length of time you have left on your deal.

If you recently got a cheaper deal and want to stick with it, then it's probably worth taking it with you.

On the other hand, if you only have a few months left it may be worth switching.

Reapplication and affordability when porting

Many mortgages are portable but, even if yours is, you may not be able to move it.

In some cases porting a mortgage means reapplying, which may not be a simple matter of signing more forms.

Since the Mortgage Market Review introduced new rules in 2014, getting a mortgage has been a more stringent process.

New affordability rules mean a lender's criteria may have changed and they may now be more concerned about a number of things, namely your income and outgoings.

"What many don't realise is that lenders will still assess the borrower's situation when porting, even when they aren't taking any additional borrowing," said Hollingworth.How to cut the cost of your mortgage

"With affordability rules and lending criteria tightening since the credit crunch some have been surprised to find that they've been turned down by their existing lender.

"That leaves them with the prospect of remaining in the current property or paying it off to find a more accommodating lender elsewhere to enable the move."

If your circumstances have changed since you got your mortgage - for example if you've changed jobs and now earn less, or have gone self-employed - you may find it harder still to port your mortgage.

Your lender will check credit scores held on you, and check whether you've kept up with mortgage payments so far.

If your credit score isn't up to scratch or has dropped in recent years, your lender may not approve you and you may not be able to get a new mortgage.

This means you might be a mortgage prisoner, and you may have to wait it out before moving. Even if your circumstances haven't changed, if your lender's requirements have then you may be affected.

Porting your mortgage to a more expensive property

If you're buying a more expensive property and need to borrow more money, there are two things to be aware of.

Firstly, your lender may be unwilling to lend you the extra money. If you're buying a more expensive property your lender may not allow you to port your mortgage, as you may be close to the maximum they're willing to lend you.

Secondly, the additional amount may have to be put onto another mortgage, which may involve fees and a different rate.

For example, if your home is worth £100,000 and you have a mortgage for £75,000, you'll probably be on a deal for 75% LTV.

If you want to move to a home worth £160,000 and port your mortgage, you might only be able to borrow the same £75,000 on your current deal, meaning you'd have to find an extra £60,000 deposit or take an additional 'top-up' mortgage product.

As your £25,000 equity would only equate to a little over 15% deposit, that would mean the top-up mortgage product could be at the rate for 85% LTV mortgages with that lender.

So you'd be paying off £75,000 on your original rate and £60,000 at a higher rate.How to improve a credit score

Each lender will have their own rules for how they apply rates to top-ups when porting, so it's a good idea to ask your lender what their policy is.

"Any top-up borrowing will need to be taken from the existing lender," said Hollingworth.

"There's no guarantee that the lender will be able to accommodate the larger borrowing or at what rates, so it could leave the mover facing a stiff penalty to go elsewhere."

Porting your mortgage to a cheaper property

If you downsize to a smaller property, you'll need to repay the outstanding amount back to your lender - and this could result in paying an early repayment charge on the portion repaid.

For example, using the example above with a 75% loan on a £100,000 house, if you then downsized to a flat for £80,000, you probably wouldn't be able to port all of your £75,000 loan as that would give you a LTV of 93.75%.

Instead, to keep the 75% loan to value, you'd have to take a mortgage for a maximum of £60,000, repaying at least £15,000.

That could mean you'd owe early repayment charges on £15,000.

Speak to a mortgage adviser about porting

Whether or not you should move your mortgage ultimately depends on whether it's the best option for you financially.

Speak to a mortgage adviser to do the sums and work out what's best, taking into account fees for leaving your current deal and fees for opening a new one.

You can get fee-free, award-winning mortgage advice from London & Country - phone 0800-073-1959,[1] or request a call back.

By Emily Bater