What is porting a mortgage and how does it work?

What is porting a mortgage?

Porting a mortgage is when you transfer your current mortgage product to another property. Whether your mortgage is portable or not depends on a number of factors, and there’s no guarantee that your lender will let you do this.

Can I transfer my mortgage to another property?

Whether you can transfer your mortgage to another property depends, as some mortgages aren’t portable, in which case you’d need to get a brand new mortgage for your next home. Porting a mortgage is very similar to the original mortgage application process. Your lender will carry out affordability checks and credit searches to ensure the mortgage deal is still affordable. 

How does porting a mortgage work?

When you port a mortgage, you’ll transfer an existing mortgage deal over to a new property. To do this, you’ll repay your current mortgage to your lender using the proceeds from the sale of your home. Then, the mortgage lender will issue you a new mortgage using the same terms as the previous one. 

Is porting the same as remortgaging?

No, porting a mortgage isn’t the same thing as remortgaging your property. When you port your mortgage from one property to another, you must stick with the same lender, interest rates and terms (unless you borrow more money, in which case your lender may set a different rate and new terms for the additional borrowing). Whereas when you remortgage, however, your current mortgage deal ends and you switch to a brand new one. 

This can be with a completely different mortgage lender, if you wish, or you can do a product transfer to switch deals with your current provider. When choosing a new mortgage deal, you can choose from a selection of lenders and mortgage products from across the market, depending upon your eligibility. The better your credit rating and overall affordability, the more choice you’ll typically have. 

To find out what mortgage deals you could be eligible for, create a free Tembo plan. Our smart decisioning technology will find all the buying schemes you qualify for to give you a personalised mortgage recommendation, including indicative mortgage rates.

Perfect for you: How to remortgage

Next up: What to do if you’re struggling to remortgage?

What are the benefits of porting a mortgage?

There are two main reasons why you might port a mortgage instead of remortgaging. If you took out your current mortgage deal when interest rates were lower than they are now, porting could save you a lot of money. 

The second reason is to avoid early repayment charges, which are applied when you switch to a new mortgage before your current deal ends. Early repayment charges can vary depending on your lender and the terms outlined in your mortgage agreement. They’ll usually be calculated as a percentage of the outstanding mortgage amount, typically between 1% and 5%. 

Read more: Are interest rates going up?

Can I borrow more money when porting a mortgage?

Yes, it is possible to port your mortgage to a property that's more expensive than your current home, but you must meet your lender's criteria to be offered a larger loan. If your lender agrees to give you a bigger mortgage, they may offer a new mortgage deal for the additional amount. This can result in you having to pay a higher rate of interest on your additional borrowing. Your two mortgage loans will also have different end dates.

Let’s imagine your current home is worth £300,000. You have £200,000 equity in the property and owe your lender £100,000. If the house you want to move to is worth £350,000, you’ll need to find an extra £50,000 to bridge the gap — either through savings or additional borrowing.

If you’re moving to a cheaper property and you don’t need to borrow as much as you have now, you may be able to reduce the amount of interest payable by making overpayments. Most lenders will let you pay up to 10% of the outstanding mortgage balance each year without charging any penalties. If you want to pay more, you may get hit by a pesky ERC.

Do you have to pay a deposit when porting a mortgage?

Yes, you’ll still need to pay a deposit when porting a mortgage from one property to another. But you’ll usually use the equity that you have in your current home as the deposit on your new one, as opposed to needing to save up. 

When you ask your lender to port your mortgage, you may notice similarities between the porting process and your original mortgage application process — even though this isn’t the same thing as remortgaging. You’ll still need to go through the lender’s affordability checks and pay a deposit etc. but your terms will stay the same as before - as long as you pass all the lender’s affordability requirements!

Is porting a mortgage easy?

Porting a mortgage might sound easy, but it can be complicated. It can be particularly stressful if you’re moving to a more expensive home and you need to borrow more money. You might also face challenges if your current home is in negative equity, meaning the house is worth less than the outstanding mortgage amount. Most lenders won’t let you port a mortgage if you’re in negative equity, and it can be hard to remortgage, too. 

Does it cost to port a mortgage?

Technically, porting a mortgage doesn't cost anything as there’s no such thing as a porting fee, but you may have to pay other charges. For example, your lender will want to carry out a property valuation to make sure your new home is worth the asking price. Some lenders will charge you a valuation fee, while others won’t. 

If you’re borrowing more money on top of your original mortgage, you might also have to pay arrangement fees. If a different interest rate applies to your additional borrowing, consider how much this’ll cost over the full mortgage term as well - even an increase of just 1% can make a big difference to the cost of your mortgage. 

It’s a good idea to speak to an expert mortgage broker about this. You probably have more options than you think. A specialist broker can help you navigate the complicated property world and could potentially save you thousands. 

Can a bank refuse to port a mortgage?

Yes, unfortunately banks have every right to refuse your request to port your mortgage. This can be for a variety of reasons; they might turn you down if:

• Your new property doesn’t meet the lender’s criteria
• Your current mortgage product isn’t portable
• Your current home is in negative equity 
• Your mortgage affordability has changed

There are many reasons your mortgage affordability might have changed since you got your current mortgage. For example, if your credit score has fallen, you’ve started a new job recently or you’ve gone self-employed, you might not pass your lender’s affordability checks. This can be frustrating, especially if you know you could afford the repayments. But it’s a very common problem and isn’t a sign that you’ve done anything wrong or you’ll be unable to get a mortgage in future. 

If this happens to you, don’t fret! We’ve helped thousands of home movers and buyers discover how they could afford their dream home, even if their lender has refused to port their mortgage previously.

When is it not a good idea to port my mortgage?

Porting your mortgage can be a smart move if you have a good interest rate and you’re happy with the current terms. It can also help you avoid early repayment charges.

However, it can have downsides too:

1. You might miss out on better mortgage offers elsewhere

Some of the best offers are only available through a mortgage broker, meaning you can’t apply directly through a lender and they won’t be visible on price comparison websites. If you’re able to find a better interest rate, this can sometimes make up for early repayment charges and leave you financially better off overall. 

2. Borrowing more money can be expensive and unnecessarily complicated 

If your new home is more expensive and you need to borrow more money, you could end up with two mortgage products with different rates and end dates. This can complicate things and cost you more than it would to remortgage. 

3. You may have fees to pay

Don’t forget to factor valuation fees, arrangement fees, and legal fees into your calculations when working out how expensive it would be to port your mortgage. This might mean it’s a smarter move to remortgage, or sell your property and start a new mortgage deal all together. 

If you’re hoping to move house soon, talk to Tembo before requesting a mortgage transfer. Even if you can port your mortgage, this doesn’t mean you should. You may find a much better mortgage deal elsewhere, with better terms and interest rates. 

In some cases, it may be necessary to look for alternative ways to increase your mortgage affordability or buy a new home, including Guarantor mortgages and Shared ownership schemes.

Thanks to our smart decisioning technology, extensive knowledge of the mortgage market and relationships with over 100 lenders, we’ll know which lenders are most likely to approve your application and which are best to avoid.