Are you a UK homeowner looking to move house and want to know whether you can take your mortgage with you?
Have you ever wondered if it’s possible to switch your existing mortgage over to the new property or if using a broker is necessary for the process?
The short answer is yes, it is possible to move your mortgage to another house if certain criteria are met.
It’s important to understand the process and what it takes to be approved for a new mortgage, as this will help ensure that everything runs smoothly when it comes time to buy your new home.
Transferring a mortgage to another property
Moving house is a stressful, but exciting time. One of the biggest challenges often faced is how to manoeuvre transferring your mortgage to your new property. Thankfully, it can be an easier process than you think if you utilise the knowledge and experience of a reliable mortgage broker.
Your mortgage needs to be ‘portable’, or have a portability option for this to be possible.
Can I port my mortgage?
If you’re wondering if you can port your mortgage, the answer is yes! (Probably)
Porting your mortgage simply means transferring your current mortgage interest rate from one property to another (with the same lender). This can be a great option if you’re looking to move but want to keep a really competitive deal and avoid exit fees.
However, it’s important to note that not all mortgages are portable, so you’ll need to check with your lender to see if this option is available to you.
How do I port my mortgage?
Porting your mortgage essentially means taking your existing mortgage deal with you when you move house. It can seem overwhelming, but it can save you money in fees and early repayment charges.
Let’s say you have a £250,000 mortgage with a 2% fixed rate, which has two years left to run.
Now you could just leave this mortgage behind and sign up for a new one. First, you will need to pay some hefty early repayment charges, and second, the new deal may not be as good as the one you have now.
Instead, you could look to transfer the £250,000, and the 2% fixed rate, over to a new property when you move house. You stay with the same lender, keep a good deal and avoid the ERCs.
The first step is to speak to your lender and find out if porting is an option for you, or ask your mortgage broker to investigate.
CONTACT A MORTGAGE BROKER
If you are ready to take the next step then we can put you in touch with a fully qualified independent mortgage broker.
How long does it take to port a mortgage?
When it comes to porting a mortgage, one of the most common questions people have is how long the process will take. Unfortunately, there is no definitive answer, as it will depend on various factors such as your current mortgage lender and any issues that might arise during the application process.
It is generally a good idea to allow several weeks for the process to be completed. This will give both you and your lender enough time to handle all the necessary paperwork and ensure that everything is in order before the transfer is made.
You are in effect applying for a new mortgage but reusing the fixed rate you already have. So the admin time should be 2-4 weeks, in line with a standard mortgage application.
Once complete the lender will issue you with a mortgage offer, which details all aspects of the new mortgage.
In a separate article we answer the question: How long does a mortgage offer last?
Can I borrow more money?
When considering porting a mortgage, many people wonder if they can borrow more money in the process. The answer is not a simple one, as it depends on various factors such as your credit score, income, and the loan to value.
If you are moving to a more expensive property then it stands to reason that you may want to borrow more money.
You would do this via the mortgage application form, which would be with your current lender.
You still need sufficient income and equity to qualify for this larger amount, along with passing the usual credit and affordability checks.
Can I borrow the extra on my current rate?
Unfortunately not.
Most lenders will want the additional borrowing to be on a standard rate or tracker rate. Some will allow you to choose a more competitive rate from their current range.
The new property
The portability option just means that the lender will consider letting you move your interest rate deal, to another property, subject to all the other lending criteria. This will include credit checks and affordability etc.
The new property needs to be acceptable to the lender.
In the majority of cases this isn’t really a problem. But there are certain styles of houses that can cause some issues, such as timber framed houses, steel frame houses, thatched properties and PRC concrete. These are classed as non-standard construction and may require a specialist property mortgage.
Flats over shops, or near to commercial properties are not liked by all lenders and underpinned houses.
When looking into repossessed houses for sale, it can be difficult determining how they are built. And not all banks will provide flying freehold mortgages due to the legal complications.
There can also be issues with getting a mortgage on a house with subsidence, even though the remedial work and underpinning has been done.
If this is the case, and your lender doesn’t accept these types of homes, then the portability option cannot be used.
What happens if I’m moving to a smaller or larger property?
Whether you’re moving up or down the property ladder, it’s always important to speak with your mortgage broker to ensure you understand the implications of any changes before making a decision.
Loan to value and affordability are key to both options.
If you need to borrow more, then this should be possible if you have sufficient income to qualify.
If you are downsizing and need to borrow less, there may be early repayment fees to pay on the part you have redeemed (paid off).
Do I have to pay a deposit if I’m porting my mortgage?
Porting your mortgage can be an excellent option for homeowners who are looking to move but want to keep their current loan terms intact.
So, do you have to pay a deposit when porting your mortgage?
This depends on the amount of equity that you have now and the proposed loan to value for the new property. If the LTV is above what the lender is happy with then they may ask you to contribute via a cash deposit, which gets added to the equity amount.
This reduces the size of the mortgage and lowers the LTV percentage.
Will I still have to go through an affordability test?
The answer is generally yes, as this is an important step in the mortgage application process.
An affordability test helps lenders determine whether or not you are capable of making mortgage payments on time and in full. This will include looking at your income, expenses, credit score, and overall financial situation.
While it may seem daunting, going through an affordability test can be a helpful exercise in ensuring you can comfortably afford your mortgage payments in the long run. Some lenders may use a stress test where they see how you would cope if interest rates went up.
What if my mortgage isn’t portable?
The portability of a mortgage means that a borrower can transfer the existing mortgage, including its special interest rate, to a new property without having to pay any penalty exit fees.
This allows homeowners to take their current interest rate and terms with them to their next home, which can save them money in the long run.
However, if your mortgage isn’t portable, then you have a difficult decision to make.
If you still want to move house then you will have to pay the early repayment fees, which could be several thousand pounds.
Alternatively, you could wait it out and stay where you are until the interest-rate deal ends.
Advantages and disadvantages of porting a mortgage
Porting a mortgage can be a great solution for homeowners who are looking to move but want to avoid the hassle of breaking their mortgage contract. The main advantage of porting is that it allows you to move home while keeping the same fixed rate mortgage, without having to pay a penalty.
This means that you can keep your current interest rate, which could be lower than what’s currently available on the market. However, it’s important to keep in mind that porting your mortgage is not always the right choice for everyone.
There may be fees associated with the process, and you may also miss out on the opportunity to shop around for a better mortgage option. As with any financial decision, it’s important to weigh the pros and cons and consult with a mortgage professional to determine what is best for your situation.
Transferring a mortgage can seem confusing at first, but as you now know, it is doable.
There are advantages and disadvantages to porting your current mortgage over to another property; take the time to weigh these up so you know what’s in store.
Why not let Respect Mortgages introduce you to an independent mortgage broker who can sort all of this out for you?
They will look at your options, check the portability status, and liaise with your current lender to set up the new mortgage for you.
