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“Porting a mortgage always has to be the first option for a consumer, especially when a redemption penalty is payable or when the existing loan is at an attractive and competitive interest rate. At The Mortgage Broker Ltd we will assist consumers in porting their mortgage from one property to another and will handle all the paperwork for them in one easy process” Darren Pescod MD The Mortgage Broker Ltd.

As many people begin to think about looking for a new property to call home, the vast majority of current home owners will be able to transport their existing mortgage deal to their new property along with their furniture, house plants and dreams of a better future –  This is known as ‘porting’ your mortgage

While most have probably not heard of the concept before, porting a mortgage is by no means a new financial innovation. Thanks to strong competition in the mortgage sector some ten to fifteen years ago, porting your mortgage became more and more common.

In simple terms, if you already have a mortgage on your current property, when you move to a new home you can apply your existing mortgage to your new abode. Porting your mortgage gives you the opportunity to keep in place your existing mortgage loan rather than running the risk of searching for a new mortgage deal which has the potential to see you paying a higher interest rate.

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While on paper mortgage porting does look like a great option with the possibility of saving time and money, the process does have its drawbacks. First of all the portability of your home loan applies only to your existing loan. When moving house a considerable amount of individuals look to climb the property ladder and therefore, generally speaking, require more funds than of which their current mortgage provides. If this is the case, porting your mortgage may not be a possibility. Lenders are not duty bound to offer the same interest rates to borrowers should they want to increase the size of their mortgage loan.

Should you wish to apply for extra funds with a view to porting your mortgage you also have to consider the cost implications? In effect, the whole mortgage will be underwritten for a second time, just as it was the first time around. Your new property will need to be assessed with surveys, your income will be scrutinised again, and the vast majority of lenders will insist that you can only transfer your mortgage if you are moving into your new home on the same day as you leave your old one; there are though lenders that will give you a time frame of say three months to complete on your new purchase allowing you some degree of flexibility.

For those who are looking to down size, mortgage porting does seem like a feasible option, however this does depend on the type of mortgage you already have in place and redemption fees may be payable.

It is worth remembering that your current mortgage agreement does not necessarily mean that you are eligible or entitled to port a mortgage. As with a regular mortgage, you still have to apply to a lender to port your existing loan much in the same way as if you were applying for a completely new mortgage. Once again credit checks will be done and your current financial status will be taken into consideration. If any of your financial circumstances have changed since your original mortgage application there is a chance that your application to port could be rejected.

As with any loan, not all lenders adhere to the same criteria codes when it comes to porting a mortgage and many individuals will be tempted to stick with their current lender. While staying committed to your current mortgage provider may give you some reassurance it may not be the best option for you and is worth checking this out with your mortgage broker.

 

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