You have made the decision to move home, but what do you do with the mortgage? Porting your mortgage from your existing home to a new property can seem like a hassle free, easy path to follow, but that is not always the case. Not all mortgages are portable and porting your mortgage isn’t always the best financial option. In this article we look at porting your mortgage and what you might want to consider when making a decision whether to keep your existing mortgage and apply it to your new home or to go for a new deal.
Can You Port Your Mortgage?
Porting your mortgage simply means that when you sell your existing home and buy a new one you take your current mortgage and apply it to the new property. The process isn’t quite as simple as that though; even if your mortgage is portable (not all are, so do check), there are no guarantees that you will be successful. By porting you are still reapplying for your mortgage and you may not qualify if the new property requires a higher mortgage loan value or if your circumstances have changed since you originally applied. It could be that due to the economic climate, that the lender’s criteria has changed and that could also prevent you from being able to port your mortgage.
Should You Port Your Mortgage?
Porting your existing mortgage to a new property might not be the best deal for you. First check to see if your mortgage is indeed portable. If it is then you will need to determine if porting your mortgage is the best way forward for you. Is the interest rate on your mortgage competitive with the current offers? Can you get a better deal elsewhere? How long is left on your mortgage deal and what are the financial penalties if you exit the deal early? It could be that there are better deals with other (and often the same) lenders out there for you. Lower interest rates are often available when you have a better loan to equity balance. So, if your new property is lower in value than your current one and you will therefore you have a higher equity to loan ratio, then your current mortgage deal might not be as competitive as you first thought.
This is where engaging with a professional can really pay off. A mortgage or financial advisor will be able to look at your current deal versus a new one and help to produce the figures to determine which way forward makes the most financial sense for you.
Same Rules Apply To Porting As With New Mortgages
Of course, all the usual rules apply when porting a mortgage, as if you were applying for a new mortgage loan. In order to be successful in your application, make sure your credit report in good shape, that the new property is suitable (is the lender likely to want to loan money on the property) and will the lender believe that you can afford the repayments.
The information contained in this article is generalist and should not be relied upon as every circumstance is different. It is always advisable to seek independent advice specific to your requirements when making financial decisions.
