What is Porting a Mortgage – Things to Consider

Borrowing Less

If you’re downsizing to a cheaper home, it’s still necessary to meet the same terms. Your new LTV must not exceed your current one. That means it’s not likely you’ll be able to take the full amount of your existing mortgage with you when moving. 

If you do borrow less on the new deal than the amount owed on your current mortgage, you may be faced with early repayment charges on the amount not being ported. 

In some cases, when porting your mortgage, you may need to pay an early repayment charge (ERC). However, it’s possible your lender may refund any ERCs paid, depending on when the new mortgage completes. 

How to Port Your Mortgage: An Overview

If your circumstances have stayed pretty much the same since applying for your current mortgage, the process of porting your mortgage should be fairly easy. 

Here’s a quick overview of how the process works: 

1. See if you can port your mortgage
2. Weigh the advantages and the disadvantages of porting your mortgage
3. Talk with a mortgage broker about your options; choose a broker who understands the porting process
4. Gather up the necessary paperwork and submit your application to the lender

The Pros & Cons of Mortgage Porting

Porting your mortgage has advantages and disadvantages that need to be considered before moving forward with this process. Here are the main pros and cons of mortgage porting: 

Pros

• Early repayment charges or mortgage exit fees will not be enforced because you’ll be staying with the same lender
• You can transfer the same rate to your new property even if the overall interest rates are now higher than before
• Although it’s necessary to resubmit your application, you may not need to complete as many forms. Your lender already has much of your information

Cons

• Staying with your original lender doesn’t automatically mean you’ll get the best deal on the market
• You’ll still have to pay for certain fees, such as legal and valuation fees
• If you’re borrowing more, you may end up with two mortgages at different rates

Summing It Up

Before deciding to port your mortgage, be sure to check your original mortgage deal to make sure it’s portable. Consider any changes to your circumstances, as you’ll need to reapply for the mortgage and may no longer be eligible. Finally, remember you’ll need to pay the valuation and all legal fees relevant to moving home. 

It’s also a good idea to speak with a reputable mortgage broker who has knowledge and experience with mortgage porting. 

In some cases, you can end up with a better deal by mortgage porting, but not always!

FAQs (Frequently Asked Questions)

Can I port my mortgage to any property I choose?
While mortgage portability is an option, not all properties may be eligible for porting. You’ll need to consult with your lender to determine if your desired property meets their criteria.

Is it possible to change the terms of my mortgage when porting?
Generally, the terms of your mortgage, including the interest rate, will remain the same when porting. If you want to change your mortgage terms, you may need to consider other options.

What happens if I can’t sell my current home before purchasing a new one?
Timing is crucial when porting a mortgage. If you can’t sell your current home before buying a new one, you may need to explore bridge financing or other interim solutions.

Are there any tax implications when porting a mortgage?
There are typically no tax implications when porting a mortgage since you’re essentially transferring an existing loan to a new property.

Can I port a mortgage with a variable interest rate?
Porting a mortgage with a variable interest rate is possible, but it may come with additional considerations. It’s essential to discuss this with your lender.

How can I find the best mortgage porting deals in the market?

To find the best mortgage porting deals, it’s advisable to work with a mortgage broker who can help you navigate the options and find the most suitable deal for your specific situation.