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Saturday 21 December 2024
Saturday 21 December 2024
Saturday 21 December 2024
Saturday 21 December 2024
Porting your mortgage can be a valuable feature of your current loan, especially if you’re considering moving home during a fixed-rate period. When you take out a fixed-rate mortgage, it’s common to have early repayment charges (ERCs) if you clear the loan within the fixed term. Porting your mortgage can save you significant money by avoiding these charges, but there are key considerations to bear in mind.
Why Porting Your Mortgage Matters
Porting allows you to transfer your existing mortgage product to your new property, helping you avoid early repayment fees. In many cases, lenders also allow you to “top up” your mortgage if you’re moving to a more expensive property and need to borrow more. However, the additional borrowing is usually issued as a separate product with its own terms, so planning carefully is essential.
For instance, if you’re three years into a five-year fixed-rate mortgage, the top-up product might be more suitable as a two-year fixed rate to align both products’ end dates. This approach minimizes the time during which part of your mortgage is subject to an early repayment charge. Similarly, if your fixed-rate mortgage is close to expiring, you might consider a tracker product with no ERCs, even if it’s slightly more expensive initially. This flexibility allows you to explore other lenders when remortgaging, potentially saving you significant money in the long term.
Like-for-Like Porting
Historically, porting required you to apply as if it were a new mortgage, passing all credit and affordability checks. However, many high street lenders now allow like-for-like porting, which means you can transfer your existing mortgage at the same loan amount (or lower) without undergoing stringent checks, provided you’ve kept up with repayments.
This is particularly helpful for those downsizing or moving to properties with lower running costs, even if their income or credit score has changed due to the rising cost of living.
Changing Names on a Ported Mortgage
Another common question is whether you can port a mortgage if the names on the loan change. For example:
Moving from a single name to joint names on the new property.
Transferring the mortgage to a different individual after separation, where one party continues with the ported mortgage alongside a new partner.
In these cases, lenders often require a full underwriting and affordability assessment, especially if the loan amount or other terms change. However, this process can still allow you to retain your current rate and avoid paying ERCs.
Breaking the Chain and Claiming Back ERCs
If you’re selling your property and want to break the chain—clearing your mortgage before purchasing your next home—some lenders allow you to pay the ERC and claim it back if you successfully complete on a ported purchase within a set time period (typically 3-4 months).
Key Considerations:
Check with your lender, as some require a ported application to be submitted to underwriters before the sale completes.
If you’re reducing the mortgage amount on your onward purchase, you may need to pay a proportion of the ERC on the overpaid amount.
Our advisers can help you calculate and plan for these costs, ensuring you’re well-prepared.
How We Can Help
Porting your mortgage involves many moving parts, from understanding lender-specific rules to managing multiple products with differing terms. Our team at Barrett Mortgages will guide you through these considerations, ensuring you make informed decisions that align with both your immediate needs and long-term goals.
Whether you’re moving to a larger property, downsizing, or exploring how to break the chain, give us a call. We’ll work with you to navigate the porting process and help you make the most of your current mortgage while minimizing costs and complications.
Porting your mortgage can be a valuable feature of your current loan, especially if you’re considering moving home during a fixed-rate period. When you take out a fixed-rate mortgage, it’s common to have early repayment charges (ERCs) if you clear the loan within the fixed term. Porting your mortgage can save you significant money by avoiding these charges, but there are key considerations to bear in mind.
Why Porting Your Mortgage Matters
Porting allows you to transfer your existing mortgage product to your new property, helping you avoid early repayment fees. In many cases, lenders also allow you to “top up” your mortgage if you’re moving to a more expensive property and need to borrow more. However, the additional borrowing is usually issued as a separate product with its own terms, so planning carefully is essential.
For instance, if you’re three years into a five-year fixed-rate mortgage, the top-up product might be more suitable as a two-year fixed rate to align both products’ end dates. This approach minimizes the time during which part of your mortgage is subject to an early repayment charge. Similarly, if your fixed-rate mortgage is close to expiring, you might consider a tracker product with no ERCs, even if it’s slightly more expensive initially. This flexibility allows you to explore other lenders when remortgaging, potentially saving you significant money in the long term.
Like-for-Like Porting
Historically, porting required you to apply as if it were a new mortgage, passing all credit and affordability checks. However, many high street lenders now allow like-for-like porting, which means you can transfer your existing mortgage at the same loan amount (or lower) without undergoing stringent checks, provided you’ve kept up with repayments.
This is particularly helpful for those downsizing or moving to properties with lower running costs, even if their income or credit score has changed due to the rising cost of living.
Changing Names on a Ported Mortgage
Another common question is whether you can port a mortgage if the names on the loan change. For example:
Moving from a single name to joint names on the new property.
Transferring the mortgage to a different individual after separation, where one party continues with the ported mortgage alongside a new partner.
In these cases, lenders often require a full underwriting and affordability assessment, especially if the loan amount or other terms change. However, this process can still allow you to retain your current rate and avoid paying ERCs.
Breaking the Chain and Claiming Back ERCs
If you’re selling your property and want to break the chain—clearing your mortgage before purchasing your next home—some lenders allow you to pay the ERC and claim it back if you successfully complete on a ported purchase within a set time period (typically 3-4 months).
Key Considerations:
Check with your lender, as some require a ported application to be submitted to underwriters before the sale completes.
If you’re reducing the mortgage amount on your onward purchase, you may need to pay a proportion of the ERC on the overpaid amount.
Our advisers can help you calculate and plan for these costs, ensuring you’re well-prepared.
How We Can Help
Porting your mortgage involves many moving parts, from understanding lender-specific rules to managing multiple products with differing terms. Our team at Barrett Mortgages will guide you through these considerations, ensuring you make informed decisions that align with both your immediate needs and long-term goals.
Whether you’re moving to a larger property, downsizing, or exploring how to break the chain, give us a call. We’ll work with you to navigate the porting process and help you make the most of your current mortgage while minimizing costs and complications.
