If you are moving home, there is a chance you will still need a mortgage on your next property. Should you take your existing mortgage or secure a new deal? It may not be as simple of a decision as it seems. Some mortgages are not portable, and your current deal may not be available if the loan-to-value on your new home is different or your circumstances have changed.
How do you port your mortgage?
In theory, taking your mortgage with you when you move to a new house should make it easier. However, your lender is not obligated to let you do it, and they might make it difficult for you by changing your rates, adding fees, or simply refusing. If you want to port your mortgage, you will have to reapply, which is the same process as applying for a new mortgage. Just because you had the mortgage before doesn’t mean you will be accepted for porting. Economic circumstances may have changed, meaning that it is now more difficult to get a mortgage, or the lender may have changed their criteria. Your personal circumstances may have changed, or you may have more debt or a lower income. In addition, if you haven’t made all of your mortgage payments on time, the lender will refuse to port your mortgage.
Should you port your mortgage?
Porting your mortgage may not be right for everyone. There are lots of elements to consider. However, if it is an option you want to have as part of your house move, you should do your research before putting your current property on the market and making offers on new properties. Find out how much your current property is worth to work out your new loan-to-value ratio. The most accurate way of getting a valuation for your property is to get a building survey London carried out.
Use an RICS surveyor such as building survey london. This is important because your mortgage company will not accept a report from an unregulated surveyor. Check with your mortgage company before paying for your own survey, however, in case the lender would rather instruct their own surveyor.
If you have any time remaining on your introductory period, check what the exit fees will be. Moving to a new lender and product with a better rate than your current lender will give you for porting might still be cheaper overall.
Does porting your mortgage ever work out? According to an Alexander Hall case study, there are times when it is successful.
What if I can’t port or get a new deal?
Statistics show that there are around 250,000 people stuck in their mortgage deal. These people are known as mortgage prisoners. These people are stuck in their deals because of stricter affordability tests that were introduced in April 2014. However, the FCA has called for these tests to be relaxed, which would help mortgage prisoners a great deal.