How does porting a mortgage work?

[casaberry]

We bought our first house just before interest rates went up, so we're almost 2 years into a 5 year fixed mortgage at 2.6%. I'd like to sell and move back to our old neighbourhood as soon as possible, realistically in the next 1-2 years, and I'm wondering how porting a mortgage works. Can we simply move whatever's still outstanding on the current mortgage to a new property, at the original interest rate? Or do we need to apply with the lender to port the mortgage and is it possible they'd want to change the rate? I'm hoping we wouldn't need to borrow more.

Or will we just need to wait it out another 3 years until the current term is up and hope that interest rates will have come down significantly by then?

You keep the current loan with the current rate, then the additional borrowing on a new rate. Which means you have to basically reapply like you would for any other mortgage to loan the extra on top of the current loan.

You need to apply to port it but assuming they allow it you would keep your current rate. If you need to borrow more that would be on a different rate but just on the additional amount. I've done this a few times and it was very straightforward.

That's very helpful, thanks. From something I had read, it sounded like the lender could impose a new rate to port, but if that only applies to any new lending that makes things easier.

If you're allowed to port it, you can port it or part of it and keep the existing rate to end of term. If there is an early repayment charge and you only port part of it, you will pay the ERC on the imported part.

If you don't buy and sell on the same day, and need to move to rented in between, usually you are given up to 6 months from the sale completion to complete your new purchase, otherwise you lose the deal. In that situation, the entire ERC is deducted on the completion of your sale, and then part-credited back to you on completion of your purchase.

Hope that helps and good luck with the move.

*you will pay the ERC on the UNPORTED part

You’re understanding right as long as your mortgage actually allows porting - if you’re not sure, check with your lender.

I’m currently porting my sole mortgage into a joint one with DH and borrowing more at a new rate. Like you we are desperate to move back to our old neighbourhood and we decided not to wait.

We had to go through the same process as with a new mortgage (affordability checks, etc). There’s no guarantee they will let you port so we spoke to the lender before we went on the market or viewed any houses and they issued a new AIP to show we could port. Estate agents weren’t fussed about this - they just wanted to know our house was sold - but I felt better having it!

I was confused about how they’d do a mortgage offer for my existing borrowing when that would keep going down each month. Not sure if it’s different with other lenders or if you use a broker, but my lender took the exact amount outstanding on the day we had our mortgage advice appointment.

So, say I owed £123,456 that day. The new mortgage offer is for £123,456 at the existing rate, and the remaining amount we need at the new rate.

Edited to add: we also changed the overall mortgage term, as we didn’t have to keep that the same as I had before - they were v flexible about this.

Give your mortgage provider a call - I had to ask the same question the other day and mine (NatWest) were really helpful and able to give me some figures as I’m hopping to reduce or clear my mortgage by moving.

We’ve done this a few times (moved a lot, about to move again sadly) each time we’ve kept the same rate, even borrowing a bit extra one time (think it was about £20k). This was with NatWest, 2 different mortgages each time.

Porting can be fairly ‘easy’ and saves the ERC. As others have said, you apply to port so go through the same process but you’re taking your existing deal to the new mortgage. If you need to borrow more, be mindful that the affordability criteria may mean you can’t borrow as much as you need whilst also porting. We’ve been stung by this, stupidly assumed the affordability would be the same but actually it was stricter on the porting side than applying for a new mortgage altogether.