Advice Needed on Mortgage Portability and Additional Borrowing

[CoffeeLover87]

Hi everyone, I’m looking for some quick advice regarding our current mortgage situation, and we’ll follow up with our mortgage provider for specifics. We’re currently with a mortgage provider at a fixed interest rate of 2.75%, which is locked in until 2027. We’re considering upgrading to a new home and may need additional borrowing to make it happen.
Our current mortgage balance is around £160,000, and we believe our mortgage is portable, meaning we can transfer it to a new property. The plan is to sell our current home and buy a new property valued at approximately £550,000 or more. To cover the difference, we’d use some equity from the sale, savings, and additional borrowing from the lender.
My main question is about the additional borrowing: will it be at the same 2.75% interest rate we’re currently on, or will it be subject to a new rate? Also, since the mortgage is portable, would we avoid early repayment charges or other fees when transferring it to the new property? Any insights or experiences would be greatly appreciated! Thanks in advance.

Hello I was eligible for porting my mortgage last year. We have a 1.2% rate that runs out end of next year (sob). We didn’t have to pay early repayment charges for porting as it isn’t the same thing.

Although we didn’t require any additional lending on our property, I watched a few YouTube videos about the process and I’m pretty certain that you will have a kind of second mortgage that runs concurrently with your first. This will not be on your fixed rate but will be on the new rate.

Yes it would be a new higher rate for the new borrowing. I don't recall paying fees when I ported.

You don’t get the same rate for your new borrowing no, unless they still have that product available. When you port and also need additional borrowing you essentially have 2 mortgages, the original one you ported with that term & rate, and the one for your additional borrowing which has its own term & rate.

You can port your existing outstanding balance at its current rate. However any additional borrowing would be at a new higher rate. So you’ll end up with 2 parts for your mortgage at different rates.

And yes you’ll avoid any early repayment charges when porting, because you’re
not actually repaying it.

It’ll be a new separate mortgage at whatever rate is agreed based on current market for th additional borrowing and the existing mortgage will port over

We are porting our mortgage, the extra borrowing will be on a new rate. Not excessively high just around the rates that are available nowadays. You don't pay the exit fees so long as you complete both purchases at the same time. If you sell and buy separately you have to pay your exit fee but as long as you buy and transfer the product within 6 months you get your exit fee refunded.

Please speak to your broker, but yes as others have said the new borrowing will be on a new rate which your broker should keep a close eye on because you will be remortaging each portion at different times at least to begin with

Thank you for your comments, they’ve been really helpful and have clarified a lot. It now seems quite clear that the additional borrowing will be at the new rates, and there will be two concurrent mortgages. Thanks again!

From most lenders you would effectively have 2 mortgages. One with a balance of £160k and one with the additional borrowing on the new rate. Both would have different terms, different early repayment dates and fees etc. it can be a hassle in some cases.

I know it might be a hassle, but that is one option. The other option is to sell the property, pay off the £160,000, and if there are any early repayment charges, we would need to cover those as well. After that, we could take out a new mortgage from another provider for the full amount at the new rate. That is what I think, but please correct me if I am wrong.

You just need to do the sums and a bit of guesswork for your own sit. Unless you’ve recently remortgaged which it doesn’t sound like it based on your interest rate your early repayment charge should be fairly low. The positive to porting is 160k of your mortgage will have a lower rate for a bit longer but the downside is the two parts are on two different terms and time periods. Every time one is due a remortgage there’s the product fee which is mostly in and around 1k so you will have this x2 rather than just one with one mortgage.

If it’s a good rate, you’d be mad to give up the old rate and borrow the entire amount at a new higher rate.

When I did a port/borrow more, I picked a term for the second mortgage that has a close end date to the first mortgage. So will then combine them at renewal time.

Yes what you suggest is an option, but unlikely to be the most financially sensible one- your broker should talk through both options with you

Not necessarily. The rate is not that below the current average and since it’s only on £160k and they will then have two lots of mortgage arrangement fees on an ongoing basis it could easily be financially sound to take a new mortgage. OP needs to do the maths.

I ported my mortgage when I moved last year, and borrowed an extra amount at the same time. I found it very straight forward, wouldn’t say it was any hassle, and it saved me thousands of pounds vs taking out a completely new mortgage.

I chosed a fixed period for the new borrowing that closely aligns with the end date of the original mortgage. So when the time comes I can combine both portions and move over to a new fixed rate for both of them.

If you arrange the new part of the mortgage to be on a tracker (not a fixed term) then it’s quite easy to bring the two together on a fixed rate again when the time comes.