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Porting your Mortgage – How it Works

Porting your mortgage means taking your current mortgage deal with you to a different property. Whether you’re upgrading or downsizing, the idea is to keep the same lender, interest rate, loan amount and terms and conditions.


This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.



There are a number of reasons you might consider porting your mortgage, but the driving motivation is, of course, financial. Porting helps to avoid paying exit fees or early repayment charges on your current loan and arrangement fees on a potential new loan.


The porting process is similar to that of the mortgaging process, and usually takes a couple of weeks.

You should really only consider this option if you’re happy with your current lender and are confident you won’t be losing out on a better deal with a different lender. Consider the length of time you have left on your current deal and the amount of money you’ll potentially save (or lose) by porting. A financial adviser should be able to help with this.


I regularly speak to doctors and dentists about the possibility of porting a mortgage to a new property. As we get older, we expect, or at least hope, to have paid off our mortgage, but increasingly this is not the case.

With dental and medical professionals, this might be so they can take money out of the property to help their children at university or get on the property ladder themselves. Alternatively, it could be down to wanting to fund an earlier retirement.

Even when downsizing, I see professionals taking on a mortgage, albeit significantly smaller than in their younger years. Sometimes this is simply because the rise in property prices and low interest rates on investments.


The process

  • Firstly, you’ll need to check with your lender to see if porting is even possible.
  • If it is, then you’ll need to reapply for your current deal using the details of the property you wish to move to.
  • Your provider will re-evaluate your application using their current lending criteria.

You do run a slight risk of being denied if your financial situation or their criteria have changed drastically. This can be a problem for healthcare professionals who may have decided to become self-employed since they initially took out the mortgage, or if they reduced their hours in anticipation of retirement or as the result of tax legislation changes.


Downsizing

If you’d like to save money and move to a less expensive property, you might want to port your mortgage to your new home. However, because your new home will cost less than your previous residence, the mortgage will represent a larger percentage of the property’s value than when you first bought the home.

Obviously, the more favourable the loan-to-value percentage, the better the interest rate you’ll be offered, so with these terms changing, your lender might not be so keen to keep you at your current rate.

If you’d like to borrow less than what you owe, then you’ll need to repay the difference back to your lender.

Most providers will let you reduce your loan up to 10% without consequence, but anything after that will incur a fee.

In the end, it might just be more financially viable to secure a new mortgage deal with a different lender instead of porting your mortgage.


Upgrading

On the other hand, you might be interested in keeping your mortgage deal but moving to a bigger, more expensive home. If that’s the case, then it’s possible your current loan won’t cover the cost of the property and you’ll need to borrow more money.

Porting when upgrading is a trickier situation as your lender might not approve an increase in loan on the same terms and require you take out an entirely new loan to cover the additional expense.

This might defeat the purpose of porting as you’ll be saddled with a new arrangement fee and possibly a higher interest rate. It will also complicate matters on your end — you’ll need to deal with two separate loans with unique due dates, introductory period end dates, terms, etc.


Let’s look at your mortgage options

Weighing up the pros and cons of porting your mortgage is very specific to your circumstances. If you need help deciding whether porting your mortgage is the right option for you, get in touch today.


Want to review your mortgage options?
Mortgages | Buy to Let | Property | Mortgage Planning |

Dental & Medical Financial Services have been helping doctors and dentists with finding low-cost mortgages for your home and investment properties for over 25 years. Call Chris to discuss your options.

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