What is porting a mortgage?
Porting a mortgage is one of the areas where we find borrowers get most confused. Porting is a feature offered by most mainstream lenders on residential products, and by many lenders on buy to let products.
When you are porting a mortgage, you are not actually ‘porting the mortgage’, you are, instead porting the mortgage product rate.
What does this mean?
When you are selling your home and buying a new home, the mortgage loan on your current home needs to be settled in full. This means, in short, the cash need to be provided from the sale to repay the mortgage.
When you buy your new property you set up a new mortgage secured on that new property. As a result of this, the mortgage on your current home and the mortgage on your new home are two entirely different agreements.
When you are ‘porting a mortgage’, the lender is giving you an option to take your existing mortgage product and apply it to your new mortgage.
What is the benefit of porting?
This porting feature allows you to avoid paying any early redemption penalties which may be in force on your current mortgage product.
Example:
Joan and Geoff have a mortgage with Nationwide with an outstanding balance of £150,000. They wish to sell their home, and buy a new, larger home for their growing family.
Under the terms of their current mortgage product, if they pay off the mortgage in full at this time (effectively closing the mortgage product) they will need to pay an early redemption penalty of 1.5% of the outstanding balance (£2,250).
By porting the mortgage product to the mortgage on the new property, they avoid closing the mortgage product and paying the £2,250 early repayment charge.
The mortgage product continues, assigned to their new mortgage.
Porting a mortgage – common misunderstandings
A porting feature does not mean that you will automatically be accepted for a mortgage on your new property. Your new mortgage application will still need to be assessed in full. If you are not accept you for a mortgage on the new property you cannot put your mortgage product, and if you sell your current home you will pay your early redemption penalty.
You will need to borrow at least as much as your current balance to be certain of avoiding an early redemption penalty when you take your new mortgage. If your lending level drops you may pay an early redemption penalty on the difference between your new mortgage balance and the previous mortgage balance.
You cannot port your existing mortgage product to a mortgage with another lender.
Porting a mortgage timescales
Many lenders only offer a porting feature if the new mortgage is taken out on the same day that the old mortgage is repaid. This is an ideal scenario for most home movers but is not always possible.
If there is a delay between you selling your old property and clearing the mortgage, and buying the new property, and taking the new mortgage, some lenders will still allow porting of the mortgage rate. This in effect means that the early repayment charge will be levied and will need to be paid, but it can then be reclaimed once the new mortgage is taken and the product applied.
Be careful when porting
Some lenders will not allow you to port an existing mortgage product onto a property you already own, nor to an investment property. Always check with your mortgage lender or broker before considering porting
Porting a mortgage – mainstream lenders
Barclays Porting – they say…
You have the possibility to transfer the outstanding balance of this loan to another property, subject to the new property and your circumstances meeting our lending criteria at that time. A Mortgage Exit fee will be payable
and an early repayment charge may be payable in respect of the mortgage that is being redeemed. Other fees may be charged when porting the mortgage interest rate and the terms and conditions for the new mortgage
agreement will also apply. You do not have the right to transfer this loan to another lender.
HSBC Porting – they say…
You need to have a least six months remaining on your current HSBC mortgage term.
Your new mortgage with HSBC must be taken at the same time as your existing mortgage is repaid.
HSBC will not port mortgage accounts where:
- The mortgage account is in arrears
- There are more than two applicants
- There is a marital dispute
- An HSBC product switch application is in progress
- There are more than 6 parts to the loan
HSBC will allow a borrower to port the mortgage product to a new property without sale of the current home provided the original property is being re-mortgaged simultaneously to a new lender.
Halifax Porting – they say…
You do not have the right to transfer this loan to another property.
Additional features:
Taking your product rate to a new mortgage
In the future, you can apply for a new loan on another property. If Halifax agrees to the new loan you can take the following product(s) and any early repayment charge with you for the remainder
of the product rate period(s). New loan applications are assessed in line with the lending policy at that time which may, for example, affect the repayment method, loan amount or term. The
new loan will be subject to the terms and conditions in force when you make your application.
Nat West Porting – they say…
What happens if you move house?
You have the possibility, during the period in which an early repayment charge is payable to port your existing mortgage product(s) to your new property subject to the following terms:-
You must have applied to port your existing mortgage product before redeeming your existing mortgage.
Your new application must meet our lending criteria current at the time you apply to port your existing
mortgage product. We will carry out credit checks on you, and will require a valuation of the new property.
We will decline to port if you do not meet our lending criteria in force at that time. This may mean that we decline to lend at all on the new property, or we may allow you to port less than the amount you have
applied for.
You may port the mortgage product where all existing names will also be named on the new mortgage. The mortgage product must be the same, in terms of interest rate and product end date.
You may port the mortgage product from a sole name to joint names. The mortgage product must be the same i.e. interest rate and product end date.
You may also port the mortgage product from joint names to a sole name or from joint names to joint names (where one existing party is being removed from the mortgage), if we receive written agreement from the
party being removed from the mortgage. The mortgage product can only be ported to one of the joint names on the initial mortgage. Joint customers cannot separately port the existing mortgage product. The mortgage product must be the same i.e. interest rate and product end date.
you already own.
The existing mortgage must be redeemed by some means.
If you port the full balance on which an early repayment charge is payable, we will fully refund the early
repayment charge. If you port less than the full balance outstanding we will refund only the early repayment charge payable on the amount you transfer to the new mortgage.
If you have a Buy To Let mortgage you may not be able to port this mortgage if you already own nine Buy to
Let or Consent to Let properties. Please contact us for more details.
You cannot port to a flexible mortgage type such as an Offset or One Account mortgage.
We will refund your early repayment charge if you meet these terms, provided that you complete your new
mortgage within four months of the date of redemption of the current mortgage. For example, if this
mortgage redeems on 25th January, your new mortgage must complete by or on 24th May. If 24th May
falls on a non-business day, the new mortgage must complete by or on the last business day before that
date.
If no early repayment charge is payable, you can apply to us for a new mortgage when moving house. Any new
application will be subject to our lending criteria current at the time you move, and will require credit checks and
a valuation of the new property.
Nationwide Porting – they say…
You have the right to transfer this product to a new mortgage with Nationwide on another property. However, your application will be subject to the lending criteria at that time.
If a new mortgage is agreed, you can keep this product and its existing features, but any overpayment reserve you have built up cannot be transferred.
An early repayment charge will not apply if you transfer the remaining balance and terms of this product to your new mortgage on the same day as you repay this one.
If you need to borrow more money, you’ll need to apply for one of Nationwide’s products available at that time, subject to the lending criteria.If you are borrowing less money, you’ll need to pay any early repayment charge based on the difference between
the balance remaining on this loan and any new loan.
The overpayment allowance for any product being transferred to a new mortgage will be based on the balance being
transferred and not the original amount of this loan. Your new overpayment allowance will start from the first day
of the month following completion of the new mortgage.
Santander Porting – they say…
Take your current deal with you to your new home, which is sometimes known as ‘porting’. This could save you money if your interest rate is lower than other mortgage rates currently available, and you wouldn’t have to pay any early repayment charge that may apply as long as you port the same amount. If you also want to borrow more, you can apply to take a new deal for the extra amount from Santander’s current range. For most types of mortgage, you can port your existing mortgage as long as you complete on your new home within three months of paying off your existing mortgage. If it takes longer than three months to complete on your new home, you won’t be able to port your existing interest rate. If you have a Flexible Offset mortgage you’ll need to complete the purchase of your new home on the same day you pay off your existing mortgage to be able to port your existing interest rate. Santander can’t port your existing rate if you already own your new home.