Can I take my mortgage with me when I move?

So you’ve sold your property and been to endless viewings to find your dream home. The last thing you'll want to do once you’ve found it is add to your search-load by having to find a new mortgage.

The good news is, you might not have to. Some mortgage lenders let you pack up your old deal and take it with you to your next home. The bad news is that if you’re looking to upsize or renovate a derelict house, you might not be able to take your mortgage with you… So that’s why we’ve put together this handy blog to explain who can and can’t port their mortgage and the pros and cons.

1. What does porting a mortgage mean?

Porting a mortgage means you transfer the deal you’ve got on your old place to the new home you’re buying. Most, but not all, mortgages can be moved to another home. However there can be restrictions on the number of times you can move your mortgage. But keep in mind, moving your mortgage won’t always be the best deal for you.

If you’re buying a new home that's worth roughly the same as, or less than, the place you’re selling, then porting a mortgage can be quite simple. But if you’re upsizing to a pricier home, it might be more complicated and expensive to keep your current mortgage.

2. How does porting a mortgage work?

When you want to port a mortgage, you’ll need to get in touch with your lender and explain that you’re buying a new place. What you’re basically doing is reapplying for the same deal, which means your lender will have to do the same affordability checks again.

This is the case even if you’ve always paid on time and never missed a payment.

In reality, the only thing you’re taking with you is the interest rate you pay on what you’re borrowing, and the terms of your deal.

3. What are the advantages of porting my mortgage?

For starters, if you port your mortgage you won’t have to pay early repayment charges.

Secondly, some fixed-rate mortgages are locked in for a certain number of years. If you’re moving before that fixed period ends, you could owe thousands in fees. But if you take your mortgage with you to another home, you don’t have to pay those fees.

Thirdly, If you’re not borrowing any more against your new home, then you know what you’ll be paying every month because you’ve already been paying that mortgage for years!

And lastly, if you’re moving to a cheaper home but keeping your old mortgage, you could end up with the difference in price in cash in your bank account. Now that would be a nice moving present…

4. What are the disadvantages of porting my mortgage?

Porting your mortgage sounds doable right? Well sometimes porting your mortgage isn’t beneficial and can actually be more costly.

If you’re buying a more expensive home than the one you’re selling, and need to borrow more to buy it, then porting your old mortgage can be difficult and pricey.

When you apply to port the mortgage, you’ll need to pass the affordability checks by your mortgage lender. You may also need to pay a fee to increase your loan.

Or, you might not be able to increase your loan on this mortgage, and will need to take out an additional mortgage at a different rate. To do either of these, you’ll need to pay a valuation fee. This covers the cost of your lender checking that the home you want to buy is worth what you’d like to pay for it. You might also need to pay an arrangement fee for an additional mortgage product.

It might work out cheaper to pay the exit fees on your old mortgage (if you need to) and take out a brand new mortgage on your new home instead.

5. Can all mortgages be ported?

Short answer, no. Most high street mortgages can be ported at least once but not all banks and building societies allow their loans to be ported. This should have been made clear to you by you lender or broker when you first signed up to your mortgage. In some cases, you’ll only be able to port your mortgage once or twice.

We recommend that anyone who is applying for a mortgage to ask if it can be ported.

6. How long does it take to port a mortgage?

It usually takes about a month from the moment you applied to port it to receive your new mortgage confirmation. Once approved, your mortgage offer will usually be valid for 90 days.

7. Can a request to port a mortgage be declined?

Yes. Just like for any mortgage, your lender will go through affordability checks. They will take into account your income and expenditure and look at your credit score.

A couple of reasons your request might be declined:
• You earn less than when you took the first mortgage out
• Your expenditure has gone up
• Your credit score has dipped
• You have considerable other debt

Equally, you might get turned down because the home you want to buy is 'unmortgageable'. Homes that you can’t get a mortgage against are usually derelict or in need of major structural repair, think ‘Major doer upper’.

8. What if I can’t port my mortgage?

Some mortgages don’t have provision for porting. Or you might get turned down. If you find yourself with a mortgage you can’t port, you’ll have to take out a new one and pay the early repayment charges on your old one. Or, you’ll have to wait until the period you’re fixed-in for has passed.

If you’ve only got another year or so it can be worth sitting tight and putting your home on the market when your fixed-rate period is up. But if you’ve found your dream home and you’re desperate to move, then the cost of exiting your old mortgage could be worth it.

Early repayment charges on your old mortgage are usually charged as a percentage of your entire loan. But this reduces over time. For example, if you have a five-year fixed mortgage the early repayment charge might be 5% in the first year, dropping a percentage each year until the fixed-rate period runs out.

Depending on your deal, the early repayment charges can run into thousands.

It’s worth doing the maths and weighing both options up.

Still have questions or would like to referred to a trusted mortgage advisor? Drop us an email on the link below and we'll get back to you
hello@avocadopropertyagents.co.uk

Thinking of moving? Book a valuation with an Avocado partner here.