Porting Your Mortgage?
Categories: Commercial Mortgage , Debt Consolidation , First Time Home Buyer Mortgage , Home Construction Loans , Mortgage Broker , Mortgage Calculator , Mortgage Companies , Mortgage Refinancing , Mortgage Renewal , New Construction Mortgage , Spousal Buyouts
For those looking to move houses in a much quicker, easier fashion, mortgage porting exists to make the process simple.
What does "Porting Your Mortgage" Mean?
For those not in the know, the practice of mortgage porting means to transfer your mortgage from one house, to another. The debt you owe the lender will still exist, and you’ll carry on paying it as normal - you’ll just be in a new property.
Mortgage porting is a fantastic opportunity for couples and families who are looking to upgrade, or even downsize. But it can be a daunting process if you’ve never done it before, which is why it’s important to discuss your options with your mortgage broker.
Am I Eligible To Port My Mortgage?
In most cases, yes. If you’re already on the property ladder with a mortgage, you’ve proven you can keep up repayments which should make porting no problem.
However, mortgage porting is, in some cases, not built into some mortgage contracts. Instead, it’s a feature you can add in at no extra cost. Contact your mortgage broker, who will be able to inform you of whether or not this is the case.
Additionally, when you port a mortgage you’re effectively re-applying for that same package. This means that if your situation has changed since you first got the mortgage, you may find it difficult to get a mortgage than you did the first time.
A change of situation could involve a lower paying job, or perhaps you’ve recently entered self-employment.
The way the lender assesses you could also be different now than it was when your first applied, meaning you may not get the same deal again. Usually though, these two issues aren’t a concern, but it’s best to be prepared.
How Do I Begin The Porting Process?
Firstly, since you’re moving house, you need to find a suitable property! You’ve already had experience with this on your first mortgage, so you likely know where to start.
There are two porting scenarios that could apply. Porting if you need to borrow more money, and porting if you don’t need to borrow more money.
Your mortgage broker will give you advice on which option is best for you, because one could prove more costly than the other.
Porting If You Need To Borrow More Money
Simply put, it’s still possible to port if you need more money (for a bigger house) but you’ll need to pay a fee to scale your loan.
There will be other fees too, such as a valuation fee for the new property and all fees needed to arrange the sale. Again, your broker will discuss these with you, so make sure you enquire about fees!
Since you need to borrow more money, it would be wise to look at other deals on the market. You could be eligible for a better one! If you do find a better deal, you’ll have to exit your current mortgage and apply for a new one.
This means you’ll have to pay a mortgage exit fee or penalty. Keep an eye on all those fees and extra costs - they can quickly add up. Once you’ve discussed deals with your broker and chosen the best option, your broker will help you move forward with the port.
Porting If You Don’t Need To Borrow More Money
Mortgage porting is much, much easier if you don’t need to borrow more money. You could be downsizing, buying a house in a cheaper area, or buying a cheap repossessed house.
Whatever the case, with a few minor differences. It’s unlikely you’ll need to shop around for a new deal if you don’t need more money, so you don’t need to pay a mortgage penalty.
What Else Do I Need To Know?
On your current mortgage, you’ll have built up a lot of equity in your house, which could make you eligible for better rates.
Make sure you work with your mortgage broker to assess the current market. If interest rates are at a particularly low amount, it may be wise to apply for a new mortgage, regardless of your port.
Take a look at how long you have left on your current mortgage. If it’s a few years, then the penalty could be quite high. If it’s a few months, then the fee will be quite low. Factor this in if you’re considering a new mortgage deal.
Make sure you keep a good credit rating. This will be factored into the lender's decision to give you more money.
Before you begin the process of selling your home and looking for a new one, meet with your mortgage broker. There’s no point home shopping if you can’t port your mortgage, of if you can’t afford to borrow more.
What Are The Pros Of Mortgage Porting?
By sticking with the same mortgage and transferring it to a new property, you don’t have to pay any mortgage exit fees.
Plus, if you are locked into a lower interest rate but the market interest rates are higher, you’ll be laughing! You’ll carry on paying that low rate at your new house.
Mortgage porting allows you to move home without going through the mortgage application process again.
What Are The Cons Of Mortgage Porting?
By porting your mortgage, you’re sticking with the same deal. Same interest rate, same lender, largely same contract.
This means that you could be missing out on another better deal with a lower interest rate if you shopped around.
You’ll still have certain fees to pay, like a valuation, arrangement fees and perhaps an exit fee. The cost of these fees could outweigh any financial benefits of mortgage porting.
Mortgage porting is a superb way for families and couples to move house in a stress-free fashion. As always, stay in touch with your broker throughout every stage of the process, as they can guide you through the terms and conditions. Good luck!