How Can I Go About Porting My Mortgage?
If you sell an old property and purchase a new one, you'll need to apply for a new mortgage on the new property.
In essence, it isn't the port mortgage itself, but the rates and terms that you transfer to your new home.
Lenders will want to ensure you can afford to keep up the repayments and run through a new risk assessment to ensure they can retain the same rates. If the LTV increases, for example, when you are borrowing more, they might not be able to approve your porting application.
What are the Steps to Porting a Mortgage?
When you sell the old property, the existing mortgage deal is paid off. Although you're sticking with the same lender at the same rates, you still have to go through the new mortgage application process.
The new property must be valued, and affordability checks run by the lender.
What Happens After I Port my Mortgage?
Typically, the current mortgage deal is repaid, and the new mortgage is completed on the same day.
In some cases, you can keep your current mortgage for a limited time, while proceedings finalise - this is usually between one and three months.
Can I Transfer an Existing Mortgage to a New Property?
You can - this means porting your mortgage to the new property.
The lending stays on the same terms and conditions with the same lender, although the affordability criteria will still apply.
What are the Advantages and Disadvantages of Mortgage Porting?
There are pros and cons to porting your mortgage - here are some of the most important considerations:
Advantages of mortgage porting:
- No early repayment charge penalties.
- Ideal for retaining competitive or fixed rates you don't wish to lose.
Disadvantages of mortgage porting:
- You might be able to find better rates elsewhere on the market.
- If you increase the mortgage, the rates might also increase.
- Different mortgage term end dates can be complicated.
- There are both valuation fees and legal fees that you would need to pay
Is it Easy to Port my Mortgage?
Generally yes, the process is straightforward and takes a similar time to a standard mortgage application.
If you wish to secure a fast mortgage port, give the business finance broker team a call - we manage negotiations and applications on your behalf to expedite the process.
Your lender will still need to go through the affordability assessment and run credit checks, as well as to value the new property.
Does Mortgage Porting Work if I am Upgrading?
It can, yes, depending on the circumstances. You can pay cash for the difference, or extend the mortgage value to cover the increased cost of moving to a more expensive property on your existing deal.
When porting and increasing your mortgage, the extra value is usually considered a separate loan and will be offered based on rates available at the time of the application.
If you choose to relocate to a more significant property and pay the difference in cash, this can reduce the same interest rate you pay. That is because the LTV will be lower, and therefore the lender is accepting lower risk.
Can I Borrow More When Porting my Mortgage?
Yes, and the mortgage lender will need to value the new property and assess your household income and expenses before they can offer to lend more on your current deal.
Provided you meet affordability and eligibility criteria, this is usually a simple process.
Lenders will consider:
- Your credit score and history.
- The type of property you are moving to.
- How much do you earn and your employment type
- Your age and any other circumstances.
If things have changed since the initial mortgage, or if you have incurred bad credit history in the meantime, your mortgage advisers might not be able to approve your mortgage porting application.
However, you can also consider remortgaging to a different lender - although, in a bad credit scenario, it is vital to work with an experienced broker who can identify the right lenders to apply to.
Can I Port a Mortgage to a Lower Value Property?
Indeed you can, and the process is more straightforward since you aren't borrowing any more. However, you'll still need to go through the application process, including meeting any criteria, which may have become stricter since you took out the initial borrowing.
If the mortgage value is not changing, but the property value is dropping, there can be issues if the risk factor to the lender is higher.
That is because the LTV will decrease, and they might not be willing to retain the same terms against a cheaper property.
For instance:
- You own a property worth £200,000, with a mortgage balance of £150,000 and an LTV of 75%.
- You want to port your mortgage to an existing property worth £175,000, which means that the LTV climbs to 85%.
This scenario can present an issue, and some lenders will only approve a porting application if the 75% LTV is kept stable. Therefore, you might be able to port but have to pay back £18,750 to be able to reduce the mortgage value to 75%, which is £131,250.
If you can make the early repayment charges, this is an excellent way to reduce your monthly outgoings.
Can I Port a Mortgage if I Have Bad Credit?
Bad credit applicants are higher risk - so if you want to port your mortgage, your lender might turn down the application, or require a larger deposit.
Most high street lenders cannot consider offering a ported mortgage with bad credit.
However, the existing mortgage is already in place, so if the risk factor doesn't increase, a lender might agree to switch the lending to a new mortgage.
Suppose you have been declined a mortgage port due to bad credit. In that case, you can always consider specialist bad credit remortgaging specialists who may be able to offer you more competitive rates than you are currently paying.
Low Credit Score
Low credit scores can mean that you haven't taken out much credit lending before. However, mainstream lenders are usually reluctant to lend to low credit score applicants since they can't see any repayment history.
If you have a low credit score, you can work on improving your rating before you make your mortgaging porting application.
Contact the Revolution team for more advice about improving your rating.
Late Payment History
If you had one or two late payments more than three years ago, you will usually be able to port your mortgage.
Other, more flexible lenders can accept late payments within the last year, and specialist lenders might be able to accept an application even if you have current late payments.
Record of Defaults
If you have recent defaults, you might find that high-street lenders cannot accept your application.
Some lenders place a limit on defaults being within the last three or six years, whereas niche lenders can accept live registered defaults or those within the previous year.
CCJs
CCJ policies are generally similar to defaults, so the attitude of your lender will depend on their internal systems.
If you need to consider a remortgage and have CCJs on your credit file, using an expert bad credit broker such as the Revolution team is essential.
Past Mortgage Arrears
Mortgage arrears are considered severe since they reflect previous inability to keep up repayments on secured lending.
If these were three years ago or longer, most lenders will accept your application - more specialist lenders can accept mortgage arrears within three years, or even in the last 12 months.
Debt Management Plans
Most mainstream lenders will decline a mortgaging porting application if you are in a DMP or have one registered within the last six years.
Some will accept applicants with a DMP in the last three years, and a smaller number will be able to move forward if you are currently in a DMP.
IVAs
IVA lending policies again depend on the lender's policy. They will consider the IVA registration date, and when it was settled.
Many high street lenders would not approve a mortgage porting application if there were IVAs within the last six years. Others will consider applicants who have settled an IVA within three or five years.
Niche bad credit lenders will consider an application even if you are in an IVA now - most are only available through an experienced broker.
Bankruptcy History
Bankruptcy history is serious, and most lenders will refuse a porting application if you have ever been bankrupt.
Others will accept an application provided the bankruptcy was discharged more than six years ago, whereas others can consider more recent bankruptcies.
Repossessions
If you have repossessions on your credit file, the date is critical; although many lenders will reject an application regardless of how long ago it happened.
Speciality lenders will consider your application, and again the right lender to apply to depends on how much time has passed.
Should I Check my Credit History Before a Mortgage Port Application?
If you know you have adverse credit or are concerned about credit checks, it is always worth taking the time to check out your credit record.
You can work on improving your score, identifying errors and raising requests for inconsistencies to be corrected before you make your mortgage port application.
How Does Mortgage Porting Work on Different Types of Property?
As with any mortgage, if you have a non-standard property, then the risk to the lender is higher and the process less straightforward.
That is because a standard property is always better security. After all, the chances of reselling it were the current property to be repossessed are higher.
Unusual properties where expert broker support is essential include:
- Listed buildings.
- Apartments in high rise blocks.
- Ex-council properties.
- Uninhabitable homes.
- Non-standard construction properties (e.g. made from concrete, or timber framed).
Many mainstream lenders will not port a mortgage to a non-standard property. Uninhabitable properties are particularly challenging to secure a mortgage against.
In some cases, you can port your mortgage but might need a larger mortgage to reduce the LTV and therefore minimise the risk.
How Important is my Income When Applying to Port my Mortgage?
Lending criteria have become stricter in recent years, and your income will dictate how much you can borrow on your mortgage loan.
Each lender will use their own policies to decide the maximum they can lend, based on a multiple of your annual income.
Most providers will offer up to four times your income. Others will offer five times, and some niche lenders as high as six times your salary.
It also matters what sort of employment you have and whether some other debts or outgoings reduce your disposable income, and therefore how much a lender will offer.
Does my Employment Status Matter when Porting a Mortgage?
It does - employed applicants may have a mixture of bonuses, salary, commissions and overtime payments. Self-employed applicants have a far more variable income.
Each lender takes a different view on how they assess your income, and what sorts of payment they will include in their affordability calculations.
Maternity Leave - if you apply to port a mortgage on maternity leave, your reduced income can pose an issue. Some lenders will base your income on your salary before taking leave, but it can be more complicated.
New Employment - many lenders prefer to see an employment history of one to two years, and if you are in a new role, the lack of income history can pose a higher risk.
Unemployment - if you are unemployed, unless you have a new role due to start soon, you might find it impossible to have a mortgage porting application accepted.
Self-employment - most providers will ask for two or three year's worth of trading history, with others able to lend even if you have just started trading.
Retiring - some mainstream lenders place an age cap on new applicants, or might not accept an application if you are reliant on retirement income. Others will lend to people up to age 75 or 85, whereas others have no restrictions at all.
Specialty lenders are more concerned with checking your income will ensure you can keep up with the repayments, and your age or retirement status will not be a primary eligibility factor.
What Can I Do If My Lender Refuses to Port My Mortgage?
In some cases, you can appeal the decision. If that doesn't work out, you can consider remortgaging with another provider who is more geared to your personal circumstances.
Revolution Brokers works with a broad network of outstanding lenders, who offer flexible terms around a whole host of scenarios that make it hard for mainstream lenders to support a mortgage porting application.
For help, if your lender has refused to port your mortgage, give us a call on 0330 304 3040, and we will get started.
