Posted on: May 1, 2025
Understanding Mortgage Porting During a Fixed-Rate Term
Moving house while you are tied into a fixed-rate mortgage can seem daunting. However, many lenders offer a solution known as “porting,” which allows you to transfer your existing mortgage deal to your new property. Porting can help you avoid early repayment charges associated with breaking a fixed-rate contract. Here’s an overview of what happens during this process.
What is Mortgage Porting?
Mortgage porting means transferring your current mortgage, along with its terms and interest rate, to a new property. This option is typically available to borrowers with fixed-rate mortgages, though not all lenders offer it. The main benefit of porting is retaining the advantageous terms of your fixed-rate deal, which can save you from higher interest rates or substantial early repayment penalties.
How Does Mortgage Porting Work?
- Property Sale and New Purchase: When you sell your current home, your existing mortgage will need to be paid off. If your lender permits porting, you will be able to take your mortgage to your new property.
- Reapplication Process: Porting isn’t automatic—it requires reapplication. Lenders will reassess your financial situation, including income, debt, and credit score, to ensure you still meet their criteria. Your new property will also need to pass the lender’s valuation process.
- Additional Borrowing: If the price of your new home exceeds the value of your current mortgage, you may need to borrow additional funds. In such cases, lenders may offer you a “top-up” mortgage, but this portion might be subject to different terms and interest rates.
- Early Repayment Charges (ERCs): If your lender approves the porting, you may avoid paying the early repayment charge. In some cases, you may temporary pay the ERCs, however, most lenders refund this charge once the ported mortgage is completed for the new property.
Challenges and Considerations
- Timing: Porting a mortgage requires careful coordination of your property sale and purchase. Any delays in finalizing the new deal could lead to financial strain.
- Approval Risks: Even if porting is an option, there’s no guarantee you’ll qualify for the same deal again, especially if your circumstances or financial standing have changed.
- Property Valuation: If the new property does not meet the lender’s criteria, the porting process may be jeopardized.
- Blended Rates: If you borrow additional funds, the new portion may have a higher interest rate. Also, it is likely that the two parts (or more) to your mortgage, will have different end. dates and therefore need to be reviewed at separate times.
Is Porting Right for You?
While porting can save money and preserve favourable mortgage terms, it’s important to evaluate the overall costs, including application fees, potential blended rates, and timing challenges. Speak to Luke or Craig at Village Properties to discuss your options.
Ultimately, porting a fixed-rate mortgage can be a practical solution, allowing flexibility during a major life transition, but it requires careful planning and financial consideration.
We hope this article helps you understand mortgage porting during a fixed term. If you have any more questions or need further assistance, feel free to get in touch.
Craig Power craig.power@villagefs.co.uk or Luke.spires@villagefs.co.uk.
the information contained within was correct at the time of publication but is subject to change. 01.05.2025
Your home may be repossessed if you do not keep up repayments on your mortgage.
