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What is a Home Mover?
You’re considered a Home Mover if you have a residential home and are planning to move to another property and take out a mortgage on the new property. When you move home, you may be able to port any existing mortgage you may have to your new home. If this is not possible due to the terms and conditions of your mortgage, you also have the option to change your mortgage to another lender.
What is Porting?
Porting is the term used in the mortgage industry for transferring your mortgage to a new property. Most residential mortgage products have a porting option, you can check this with your lender if you’re unsure.
When you port your existing mortgage to a new property, it’s still treated as a new mortgage application. Therefore, this may also include new application, arrangement fees and valuation fees. The lender will want to ensure you meet the affordability criteria and can maintain the new mortgage payments. You should bear in mind, therefore, that if your financial circumstances have declined since your original mortgage application, your application to port the mortgage could be declined.
Can I increase my loan amount when I port?
Some lenders will be willing to increase your current loan to allow you to buy a more expensive property when you make an application to port your mortgage. This will vary depending on their individual criteria, as well as how much equity you currently have in your existing home.
If you need to borrow more money when you move, the monthly repayments may be higher. In this case you will have to prove affordability in the long term, which will be determined during the application to port. When you port a mortgage to a new property and you require extra money to buy the new house, this is typically done as a separate mortgage part. Your existing mortgage product will usually continue on the existing terms. Then you have a secondary ‘top up’ part for the extra money. It’s possible, therefore, that you could have two separate mortgage parts, each with different interest rates, that end on different dates.
Can I decrease my loan when I port?
It’s usually possible to port your mortgage to a smaller or lower cost home. This is known as downsizing. However, when downsizing, it is important to consider any potential early repayment charge you could incur.
You are typically allowed to repay up to 10% of a mortgage each calendar year without any penalty (subject to terms and conditions of each mortgage). Therefore, if the mortgage required for the new property reduces by more than 10% of the existing mortgage balance, you may incur an early repayment charge to port the mortgage to a smaller property.
Does the value of your current or new home affect your options?
Your current home
If your current mortgage is at the stage where you have managed to gain a substantial amount of equity, either through repayment or a significant rise in property value, this can put you in a good position when moving to a new home. This is because the equity in your existing property will most likely be the deposit for your new home.
When you are buying a new house, the bigger the deposit you have means the Loan to Value ratio of your borrowing is lower. This in turn means that the mortgage may be seen as a less risky proposition by lenders. It also opens up more competitive mortgage rates for you.
If you have low equity in your current home, unless you have extra cash to put in, your options may be limited, although it may be possible to downsize. Do bear in mind that interest rates will be less competitive and you may incur charges for reducing your loan by more than 10% if downsizing.
With Negative Equity, it’s highly unlikely you’ll be able to port your mortgage. Negative Equity means that you owe more on your mortgage balance than your home is currently worth, meaning lenders consider porting your mortgage too high of a risk.
Your new home
To upsize to a higher value home, you’ll need to meet the affordability criteria and credit score required for the higher borrowing. The more equity you have in your current home or additional source of deposit, the more likely this is. If your financial circumstances have improved, that can also improve your chances of porting to higher-value property.
If your finances have declined, or you have minimal equity in your current home, downsizing to a smaller home might be your only option.
What if porting is not an option?
Although many mortgages are portable, with some Mortgage Lenders, this will not be an option. Under these circumstances you may need to consider taking a new mortgage with another lender. This may incur a penalty for exiting your existing mortgage deal early.
It’s worth weighing up these costs before making a decision. However, if you are set on moving house and your existing mortgage does not allow porting, this may be your only option.
How can Fifty Nine Financial help?
At Fifty Nine Financial, we’ve helped many Home Movers upsize and downsize into their new dream home. We will look into your existing finances, equity and mortgage terms to help you find the right Home Mover mortgage deal for you. Whether that’s via porting or changing to a new mortgage lender, we can ensure you find the option that benefits you most in the long term, supporting you with expert advice throughout your journey.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.