Can I Port My Existing Mortgage to A New Property?

If you are looking to move to a new home, but you have an existing mortgage, there may be some good news; if you have a portable mortgage you can simply take your mortgage with you. With a portable mortgage, you can transfer it from one property to another. In some cases, this may offer the perfect solution if you do not want to go through all the tedium of buying the first property. Subject to acceptance, you need not worry about finding a new mortgage product if you are satisfied with your current one. We will look at the highlights you need to know about porting your existing mortgage to a new property.

What Are the Advantages of Porting?

Porting a mortgage is a popular choice among borrowers who have a mortgage with a low-interest rate. Many mortgages also come with a hefty early repayment charge, and porting your existing home loan can eliminate these charges. The average fee on an early settlement is charged at 3% to 5% on the remaining balance of the home, so the costs can easily skyrocket. If you choose to port, you will take your existing mortgage deal in its entirety to the new property. This means you will have the same lender, at the same terms and interest rate.

How Does It Work?

The exact process will differ between lenders, but in a nutshell, porting is quite straightforward. You will still apply to your mortgage broker to approve your porting application. They will decide if they are willing to grant you what is essentially a re-application to borrow funds, based on your income, expenditure, and how you managed the existing home loan.

As with your first home purchase, the lender will still need to assess and value the new property. Technically speaking, you are not carrying over the mortgage as such, only the interest rate and terms and conditions. You will still repay the existing mortgage from the proceeds of the sale, and then resume payment on the new property. The amount you borrow does not have to match – you can borrow more or less than the original mortgage.

If your application to port the mortgage is approved, you will conclude the sale of your previous home and settle the outstanding mortgage amount on the same day. If there is a delay in the conveyancing chain between buying and selling, your mortgage lender may offer you a 30-day grace period, but it can be extended up to 3 months in exceptional cases.

Porting Is Subject to Approval

The process to port is almost the same as if you are making a new application. Ultimately, it is still up to the discretion of the lender to approve your application, so you are not automatically entitled to the option. Your current mortgager will still do an affordability assessment to see if your situation has changed for the worst since your original mortgage. If the new property is significantly higher in value, you will be considered to be more of a risk if your credit portfolio is less than ideal.

What If You Are Moving to a More Expensive Property?

You can apply for a higher mortgage (assuming you meet the criteria) if your new home is more expensive than your old one. However, if you do port, and you need to borrow the difference, the excess will be done on a new mortgage product. You will apply separately for the top-up, and the different interest rates will be combined. You can also not port your mortgage if you intend to cover the excess through another lender.

What to Do If the Lender Declines Porting the Mortgage?

Aside from improving your credit rating, there is not a great deal you can do, except to ask your lender to review their decision. It is not always possible, but putting down a lump sum to cover the additional costs can also turn the tide in your favour.

If you feel that you have been treated unfairly by your mortgage lender, you can appeal to the Financial Ombudsman Service to review your case.