Moving home involves a delicate balance of planning and emotions. While the prospect of a new home brings excitement, the moving process itself can be quite complex. One common area of uncertainty relates to the option of 'porting' your mortgage – the process of transferring your current home loan to a new property, enabling you to maintain the existing terms. To help you navigate this potential challenge, we have compiled a few key tips to keep in mind.
Understanding the Porting Process
Before diving into specifics, it is important to have a basic understanding of how porting works. When moving home, your mortgage lender will assess whether they are willing to transfer your existing loan to your new property. If they agree, the terms and conditions of your mortgage will remain the same, including interest rates and repayment schedules. This can offer significant financial benefits, as it often means avoiding additional fees or penalties associated with redeeming your current mortgage.
If you are currently benefitting from a decent mortgage deal you might be wondering if you can take it with you to your new home. The answer is not always simple and relies on factors like your lender's rules, the new property's value, and your financial situation. Here are the main steps to know when thinking about porting your mortgage:
Step 1: Assessing Your Current Mortgage Deal
Start by evaluating the details of your existing mortgage. How will the interest rate and monthly payments fare against current market rates? If the terms are indeed favourable, porting becomes an attractive option to maintain these benefits.
Step 2: Contacting Your Lender / Mortgage Broker
Contact your lender or mortgage broker if this is your preferred option. Your lender can give you clear information on how portable your mortgage is, including any transfer fees and alterations to the loan terms. Your mortgage broker will take it one step further by comparing your current deal to what is available in the wider market. It makes sense to shop around!
Step 3: Evaluate your Mortgage Affordability
A mortgage is all about what you can afford. Checking your current financial situation - income, debts, credit score - will determine if porting is an option. Importantly, if your financial health has changed, your lender might set new criteria for your mortgage. If your lender cannot offer enough for your move, a mortgage broker can easily check your affordability with other lenders.
Step 4: New Property Valuation
To transfer your mortgage, your lender will assess your new property to check if it fits their risk tolerance and loan-to-value criteria. This implies that since the property's value can affect your loan amount, a lower-than-expected valuation may require extra funds from you to complete your move.
Mortgage Porting Pitfalls to Watch Out For
While it can be a smooth process, there are pitfalls that could complicate your porting plans. Understanding these will help you prepare effectively:
Early Repayment Charges (ERCs)
If your current mortgage deal has ERCs, you might face a penalty for repaying the loan when porting. While many lenders waive the ERC, delays between selling and buying can lead to YOU paying the ERC. If permitted, you can recover the charge after completing your new purchase. Lenders with 'non-simultaneous sale & purchase' allowances usually set time limits, so check this in advance to avoid any future unforeseen costs.
Aligning Mortgage End Dates
If you currently have a fixed interest rate, consider the end date and how this fits in with any additional borrowing you may be taking on - future mortgage management will be much easier if you can align additional products with your current mortgage end date.
Property Sale Timings
The sale of your existing property and the purchase of the new one must be timed perfectly, especially in chain situations. Delays in either sale can have a domino effect on your moving plans, including the possibility of incurring an Early Repayment Charge as noted above.
Moving Home & Making the Most of Mortgage Porting
Porting a mortgage can save time and money if managed correctly. To make the most of this option, keep the following in mind:
Planning is Everything
You might assume that staying with your current lender would make things easier. However, your lender will evaluate your mortgage affordability just like they would for a new customer. Give your lender enough time to assess your situation. Starting these discussions early guarantees you will have the funds needed for your move and other related costs.
Seek Professional Advice
The porting process can be complex, so it is wise to seek professional advice. A mortgage broker can explain the financial impacts, compare porting to the broader mortgage market, and guide you in the right direction. They will be there to address any queries as you navigate the moving process.
Compare Alternatives
Though your current mortgage feels familiar, consider comparing it with the wider market place. The mortgage market changes regularly, so what is best now may not be forever. Be open to alternatives that could benefit you more. A mortgage broker can assist with this.
Porting But I'd Like To Keep My Current Home, Possible?
If you are considering moving while keeping your current home as an investment, it can be possible. Yet, it is not always straightforward due to various factors like location, finances, and lifestyle choices. Explore our detailed Let to Buy Mortgages guide for a breakdown on how these mortgages operate, associated costs, and your key considerations.
Mortgage porting, while not a guarantee, can be a crucial element in a seamless home move. By understanding the process, being prepared for potential hiccups, and leveraging professional support, you increase your chances of enjoying the move to your new home with your current mortgage in tow.
Remember, every moving situation is different, and so is the decision to transfer a mortgage. By approaching the process with clear information and a proactive mindset, you are taking significant steps towards a successful transition from 'here' to 'there' – mortgage included! Your move is a crucial moment that deserves your full attention. We hope this guide helps you prepare and brings clarity to the process of porting your mortgage.
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Your home may be repossessed if you do not keep up repayments on your mortgage.