How mortgage porting works
Porting your mortgage involves the following steps:
Check with your lender to see if your mortgage is portable
Mortgage porting is not always an option, so the first step is to check whether it is a possibility. Generally, fixed rate and tracker mortgages are portable but there are exceptions.
Submit a porting application
Even if your lender offers the option of porting your mortgage, you still have to reapply. However, as the lender already has most of the information they need, completing the application will not take as long as applying for a completely new mortgage deal with another lender.
The lender will want to reassess your affordability for the new property and make sure that the property is suitable under their criteria.
Lender assesses your application
The lender will assess your application, review your income and affordability and they will check whether there have been any changes to your financial circumstances. If you are borrowing more money to move to a more expensive property, they will check that you have sufficient equity to transfer from the sale of your existing property.
Property valuation
The property you are buying will be valued by a surveyor to ensure that the price you are paying is accurate.
Approval and transfer to new property
If your porting application is approved, the lender will make the arrangements to move your existing deal over to the new property, usually with the same interest rate and term length.
Criteria for mortgage porting
The reassessment will include a review of your:
- Income
- Outgoings
- Employment status and stability
- Childcare costs
- Loans and any other debts
- Credit score/history
When assessing your porting application, the lender is more likely to approve your application if your financial situation is the same or has improved since you applied for the original deal. However, if you have more debt or your income has reduced, this may limit your affordability.
If you are looking to purchase a more expensive property, the lender will usually require you to have equity in the property you are selling, to use as a deposit on your new property. There is likely to be a minimum loan-to-value (LTV) when upsizing and if you do not have the required amount of equity to meet the LTV rate, you may need to use savings or other funds to improve the LTV.
Moving into a less expensive property or one of a similar value will usually mean that LTV will not be an issue. However, if you are reducing your mortgage amount by downsizing, this could trigger early repayment charges if you are paying some of the loan off.
How lenders assess mortgage porting applications
When assessing your mortgage porting application, the lender will take the following into account:
- Property suitability – They will require a valuation to ensure that the price you are paying is accurate and they will also check the construction type and any potential issues such as cladding, lease length or environmental risks such as flooding.
- Affordability – The lender will review your income, including any bonuses, which will need to be evidenced by pay slips or self-employed accounts. Your outgoings will also be analysed, including any loan repayments, childcare costs and other bills.
- Credit checks – New credit checks will be completed, and any missed payments or other type of adverse credit history will affect the strength of your application.
- Employment stability – As well as checking your income from employment, the lender will look at how long you have been in your current employment and how frequently you have changed jobs.
- Loan-to-value (LTV) – When moving to a more expensive property, the lender may require a certain amount of equity in your current property.
How porting affects your mortgage terms and interest rates
When you port your mortgage, you will usually keep your existing mortgage terms and interest rate. However, if you are borrowing more money, this will usually mean the additional amount is provided as a separate mortgage loan with rates and terms based on the deals that are available when you apply.
Potential benefits and limitations of mortgage porting
The key benefit of mortgage porting is that you can continue with your current mortgage deal if it is favourable compared to new products that have higher interest rates. You may also be able to avoid costs such as early repayment charges, as you will not be redeeming your current mortgage.
Another potential cost saving is mortgage arrangement fees, although there may still be admin charges for porting your mortgage, so you should check these fees before deciding whether porting will be financially advantageous.
There are also some drawbacks to consider, such as not meeting the new affordability criteria. If you are borrowing more money, you could also have a more complicated mortgage payment structure with two different mortgage products. Staying with your existing lender could also mean that you miss out on better deals that are available on the current mortgage market.
