Before we answer the question, it’s probably worth defining the meaning of ‘porting a mortgage’. Basically, if you already have a mortgage and you want to move house you can either pay off your old mortgage and take out a new loan on the next property (if you need to) or you might be able to take your old mortgage with you to the new property. This is called porting your mortgage.
There are several reasons why porting your existing mortgage loan might be advantageous, especially if you currently benefit from beneficial loan terms. However, just because you might be able to port the loan in principle, there are various reasons why it may not work in practice.
The main issues revolving around mortgage porting relate to changes in circumstances. In other words, either the circumstances of the borrower have changed (e.g. changed job, become self-employed, changes in household income or expenditure) or changes to the lender’s loan criteria (e.g. maximum lending ratio to income, loan to value ratios, etc).
It is well worth doing some maths to establish whether porting your existing loan is attractive anyway. For example, are there better mortgage offers out there? Alternatively, are there any penalties for terminating your existing mortgage early and have you allowed for those costs and any new arrangement fees, etc that might be incurred by you if you settle your existing loan and take out another?
Sometimes, it might be worth porting your existing mortgage and taking an additional mortgage too. This is most likely to be with the same lender as part of a package, although, in principle, having two mortgages on one property is perfectly feasible. Of course, both parties must be aware of the arrangement and it is likely that one of the lenders (the one with the riskiest security) will be charging more for their loan to reflect additional risk.
In conclusion then, whilst porting an existing mortgage can be relatively straightforward in principle, it is critical that you calculate which option is better for you before making a decision. Furthermore, don’t commit to any contractual liabilities until you are sure you have a formal offer in place that suits your needs.
Contact us for further advice on mortgage porting and the pitfalls and benefits to each alternative.
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