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Home Mover Mortgages – A Guide To Porting
When making plans to move home, you’ll be thinking about what to take with you.One thing you won’t need is a removal van for your mortgage, especially if you transfer it to your new home.
What does Home Mover mean?
A ‘Home Mover’ is someone who is planning to, or in the process of, selling one property and buying another. If you’re in this position, when it comes to mortgages, you have two options.
1. Apply to transfer (or ‘port’) your current mortgage over to your new property.
2. Find a new mortgage product with a different provider.
What is Porting?
Porting is when you transfer your mortgage from your existing property (the one you’reselling) to your new property (the one you’re buying).These days most mortgages are portable, with lenders offering a porting facility to their existing customers.
It may be easier to port your existing mortgage than go through the process of finding a new lender and applying for a new mortgage. One reason is you already have a relationship with your existing lender, and hopefully, a good track record.
Having said that, your lender will assess your application to port your mortgage based on their current lending criteria. This may have changed since you took out your original home loan and your financial circumstances may be different too.
A lot depends on whether you need to borrow more money or not.
Pros and cons of Porting
If you’re thinking about porting your mortgage, you can expect a few hurdles.Here are some things to bear in mind:
- Even if you decide to stay with your existing lender, you will still need to go through a mortgage application process.
- If applying for additional borrowing your application may be rejected if your financial circumstances have worsened and your credit score has dipped.
- On the plus side, if you get the go-ahead and you’re mid-way through your fixed term you won’t pay exit fees or repayment charges.
- There will, however, be arrangement fees and valuation fees to pay relating to your new property.
- Your lender will assess your financial circumstances as if you are a new applicant.
- They will want to check your credit score too – so make sure you’re on top of any other debt repayments.
How is porting my mortgage affected if I’m upsizing
If you’re upsizing, chances are you need to borrow more money.If your existing lender says yes, an additional, stand alone ‘top up’ mortgage will be set up alongside your existing one.
This additional mortgage will have a different term end date and interest rate. You could pay a higher rate of interest and it will take longer to repay the loan.
The good news is you won’t need to pay off your current mortgage balance. That means you could save money if you’re mid-way through a fixed term.
However, if you’re at the end of the fixed term, you won’t need to pay an early repayment charge or exit fees. In which case, a new provider and mortgage product may offer better mortgage rates.
How does porting work if I’m downsizing?
If you’re downsizing and don’t need to borrow more money, porting your mortgage over to your new property could work in your favour.
If, after selling your existing property, you don’t need such a big mortgage, you can pay some of it off without incurring early repayment charges.Most lenders will allow you to pay off 10% of your mortgage balance, without penalty, each year while you are on a fixed rate mortgage.
Although valuation and surveyor fees on your new home will still be payable, the process should take less time and hassle than if you were to apply for a new mortgage.
Your lender will still carry out affordability checks, so it’s important to keep your income steady, your expenditure low and credit score high.
What if my property is in negative equity?
If your property is in negative equity, the proceeds of the sale will not be enough to cover the balance on your mortgage.However if the property you are buying costs less than the property you sold, you may be able to port the mortgage.
What is the most cost-effective way for Home Movers?
There are certainly some pros and cons to weigh up. Before you begin exploring your options, check your current mortgage account.
Find out your balance, how long there is left on your current fixed term and whether exit fees apply. The important thing is, don’t make your decision alone, ask an experienced Mortgage Broker to help you make a choice that’s right for you.
How can Limetree Financial Services help?
At Limetree Financial Services we believe in helping you make decisions about your financial commitments that are right for you and your family. An initial chat with one of our advisors will help us understand your needs and how we can help you.
If you’re busy, we will save you time and hassle by presenting all the options to you and making recommendations based on our exceptional knowledge and experience. Once you’ve made your decision we will act on your behalf.
This means contacting lenders, completing application forms and helping you compile the documents you need. We’re on hand to guide you so contact us now to arrange an appointment.
Lime Tree FS (Cambridge) Ltd is an appointed representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading name of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority a registered office in Cambridge, England.