What You Need to Know About Porting Mortgages

Moving home does not always mean waving goodbye to your current mortgage rate deal. Thanks to mortgage porting, many borrowers can transfer their current deal to a new property. This article explores how porting works, who is eligible, what it costs and how it might compare with remortgaging.

What Is Mortgage Porting?

Porting a mortgage allows you to transfer your current mortgage terms, including its current fixed or tracker mortgage rate, to a new property. Rather than paying off your loan on your old property, which might involve paying an Early Repayment Charge or “ERC” if your mortgage rate is a fixed rate, and getting a new loan on your new property, you “port” your old mortgage, saving money and keeping favourable terms [1].

However, portability is subject to your lender’s approval. Even if your mortgage is technically portable, you will need to reapply and meet updated affordability and credit criteria [1][2].

How Common Is Porting?

While porting is a standard feature in some residential mortgage products, it is not universal. Moneyfacts reported that only 27% of mortgages had portability in 2022, though this figure has been rising [2].

Porting is especially valuable when interest rates have risen during your current fixed mortgage rate term. If you fixed your mortgage rate at 2% in late-2021 for five years, say, and current mortgage rates sit closer to 5%, keeping your earlier low fixed rate for its remaining fixed rate period through porting would be financially beneficial [2][3].

Which Mortgages Are Portable?

Some standard residential mortgages are portable. Lenders often highlight the portability as a benefit. However, specialist mortgages, cashback deals or offset products might not include portability as a feature [2]. Buy-to-let (BTL) mortgages are less commonly portable. Some lenders offer this option, but most do not. Always confirm the terms of your deal before committing[3].

Will I Qualify to Port My Mortgage?

Even if your mortgage is in theory portable, several factors need to be considered before confirming portability, including:

• Affordability and income: Your income and debt levels will be reassessed under your lender’s current lending rules [1].

• Credit history: A poor or worsening credit score may lead to rejection [3].

• Lender criteria changes: Lenders’ risk appetites and rules evolve, over time. What worked before may not apply now [2].

• Property type: The new home must meet the lender’s criteria, such as construction type or value [2].

Essentially, porting is not dissimilar to applying for a new mortgage, so proper preparation is key.

The Porting Process: Step by Step  

1. Confirm that your mortgage is portable: check the terms and conditions and ask your lender [2].

2. Contact your lender early: get a preliminary assessment of affordability and the borrowing limit [1].

3. Sell your current home: porting usually requires that you echnically redeem the original mortgage upon sale [2].

4. Apply to port: submit a new mortgage application for the same product on the new property [1].

5. Get approval and proceed with completion: ideally, both the sale and purchase should complete on the same day [2].

Some lenders allow a short grace period (for example, three months) between sale and purchase, during which they may refund any ERC if you complete on time [3].

Borrowing More or Less When Porting

If you are upsizing, you will need a top-up mortgage. The additional borrowing will usually be on a separate rate and may include arrangement fees. For instance, you might port £150k at 1.8% and borrow another £50k at 5% [3].

If you are downsizing and need to borrow less, you can port a smaller amount. But if you repay more than your lender’s annual overpayment limit (typically 10% of the outstanding mortgage balance), you may face ERCs on the excess amount repaid [2].

Can You Change Lender?

Porting only applies if you stay with your current lender. If you switch lenders, you are taking out a new mortgage with a new lender and paying off the old one from the previous lender, including any ERCs. This means that there is no transfer of your current rate or terms [2].

Porting for Buy-to-Let Landlords

BTL mortgages present more challenges. Many lenders do not allow porting for investment properties. Those that do will typically require:

• Rental income to meet coverage ratios (often 125–145%)

• Property types and values that meet lending criteria

• Timing coordination between property sales and purchases [3]

Costs of Porting vs New Mortgage

Porting can save you a significant amount of money, mainly by preserving a lower fixed rate for its remaining fixed rate period and avoiding ERCs. But it is not cost-free.  You should expect:

• Valuation fees for the new home

• Legal fees for buying and selling properties

• Any arrangement fees associated with any top-up borrowing

• Higher rates on any top-up borrowing [2]

However, by contrast, taking out a new mortgage might involve:

• Paying ERC on the old mortgage if you are still within a fixed rate period

• Paying a new product fee for the new loan

• Higher interest rate on the new loan

• Legal and valuation fees [3]

Tips for Successful Mortgage Porting

• Pick a portable mortgage from the start

• Stay creditworthy: pay on time and avoid big financial changes before applying

• Time your transactions: align sale and purchase to avoid losing the porting window

• Find out the extra borrowing terms if upsizing: the rate on the top-up may be high

• Use a broker: they can help you compare porting against remortgaging thoroughly [2][3]

Pros and Cons of Porting vs Remortgaging

Pros of porting:

• Retain your existing low rate

• Avoid early repayment charges

• Less paperwork compared to switching lenders

• Familiarity with product terms [1][2]

Cons:

• You must requalify, as porting is not guaranteed

• Limited to your lender’s products

• Top-up borrowing may come with higher rates and fees

• Risk of losing out on better deals if your current rate is not competitive [2][3]

Conclusion

Porting a mortgage can help you keep a great rate and save, but it requires planning and approval. It is potentially beneficial when current interest rates are higher than your existing deal. However, if better deals are available today, remortgaging, even with an ERC, might be the smarter choice. Get in touch with your lender early, crunch the numbers and consider seeking professional mortgage advice to make the best decision for your situation.

FAQs

Q. What is mortgage porting and how does it work when moving home?

A. Mortgage porting means you transfer your current mortgage deal, including its interest rate and term, to a new property. It is a popular option for homeowners looking to move without paying early repayment charges if your current rate is a fixed rate and still within its fixed rate period. While the mortgage is repaid when you sell your old home, your lender allows you to take the same deal on to your new property, provided that you meet their up-to-date affordability and credit criteria. It is not automatic, as you will need to reapply and be approved for the new loan.

Q. Can all mortgages be ported to a new property?

A. Some standard mortgages from major lenders include a porting option, but cashback, offset or specialist deals usually do not. Buy-to-let (BTL) mortgages are also less likely to include portability. To check if your mortgage is portable, review your documents and speak to your lender or mortgage adviser.

Q. Do you have to reapply when porting your mortgage to another home?

A. Yes, porting your mortgage still involves a full reapplication process. Even though you are staying with the same lender, they will reassess your financial situation, credit score and the new property to make sure their lending criteria are met. If your income, debt levels or employment status have changed since you first took out the loan, this could affect your eligibility to port.

Q. Can I borrow more or less when porting a mortgage?

A. Yes, you can borrow more or less when porting your mortgage, but there are conditions. If you need a larger loan, such as when upsizing, the additional borrowing will usually be on a separate product at your lender’s current and probably higher rate. If you are downsizing and borrowing less, you may be charged an early repayment fee on the amount you do not transfer over and above any annual overpayment penalty free limit (often 10% of the outstanding mortgage balance). Contact your lender to understand your options and any potential charges.

Q. Is porting a mortgage cheaper than getting a new mortgage?

A. Porting a mortgage can be cheaper than taking out a new mortgage, especially if you are within a fixed-rate period and would incur early repayment charges otherwise. Porting allows you to keep your low interest rate and avoid paying the charges. However, you may still face valuation, legal and product fees, and higher rates on any top-up amount, so it is important to compare the total cost of porting versus remortgaging. Engaging a mortgage broker may be beneficial.