Mortgage porting is when you move home and take your existing mortgage with you. It’s done with the same lender and is a way to avoid having to pay early repayment fees because the mortgage remains intact on the same terms and at the same rates. Or that’s the way it’s supposed to work.
For those who had their mortgage approved prior to the mortgage affordability checks coming into effect in 2014, there’s a chance your lender may refuse your request to port a mortgage over to a new property. If that is the case, then you’d need to find a new mortgage lender.
In addition to the mortgage affordability checks, there has also been an increase from mainstream lenders using the tougher approval processes for mortgages to weed out customers they deem to not be as profitable due to previous lower rate mortgage products.
When you add on the fact that since you’ve had your existing mortgage approved, things have changed on your credit files… a request to port your mortgage may be denied due to account defaults that show up on your credit reports that weren’t there when you took your mortgage out.
This is when you can find that banks refuse your application to port your mortgage, and getting a new lender becomes problematic because of the adverse credit rating.
Even for downsizing to a smaller home, you do need to ask your mortgage provider to transfer your existing mortgage. If you’re upgrading to a more expensive home and need to borrow more existing lenders will go through a homeowner loan application process which includes credit checks and an affordability assessment.
For that reason, if you plan on buying a higher priced property and need additional finance, you can find yourself having to look away from the mainstream lenders and instead to subprime mortgage lenders – specialist firms that accept applicants presenting with bad credit.
The original deal that was made only applies to the property the loan is secured against. The vast majority of lenders will stipulate that their mortgage products are portable, meaning you can move them to a new property, however, you should be aware that just because it’s available, doesn’t mean you’re guaranteed to be accepted.
Before deciding on financing options, you should consider all the applicable fees for either a new mortgage and any fees your current lender has for your existing mortgage. Some lenders may charge a fee, others won’t. One thing to always be careful with is the interest rates. If you’re already on a high interest rate, it may be worth your while to forego porting your mortgage and use the opportunity to break out of your existing deal and into a new mortgage deal with a better rate of interest.
Hindered with bad credit though, that’s going to be difficult with mainstream lenders. For that reason, if you can work with an existing lender to port your mortgage, that’s probably the best option, unless the interest rate on offer is far too high.
If you have difficulty proving your income we would like to hear from you:
If you’re downsizing your home, or buying a cheaper property to free up some of your equity, porting will be attractive. If you’re buying a more expensive property though and you need to borrow more, you’ll need to pass an affordability assessment and meet the eligibility criteria of the lender.
Every lender’s criteria will be different. High street banks do have strict criteria, but specialist lenders all differ in the level of risk they’re prepared to take on. Some aim to work with the self-employed, others disregard CCJs, others won’t entertain bankruptcy.
For that reason, when you need finance, consulted with your existing lender and find that bad credit is hindering you, your next move would be to work with a bad credit mortgage broker to match you with a lender who will accept your application and get you the most favourable terms at the best rate.