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To Port or Not to Port? Porting Your Mortgage Explained and What to Consider

To Port or Not to Port? Porting Your Mortgage Explained and What to Consider

April 17th, 2024

If you’re a self-employed individual planning to move to a new property, you might be wondering whether it’s feasible to take your current mortgage along or opt for a new one.

With rates fluctuating in recent years, this may mean that you can keep a lower rate if it was fixed for a period that is still running.

Let’s delve into the process of porting a mortgage, its viability for you, and if it aligns with your financial goals.

What Does it Mean to Port a Mortgage?

Porting a mortgage essentially involves transferring your existing mortgage product to a new property. It’s a convenient feature, but it’s important to note that not all mortgages offer this option, and even if they do, there’s no guarantee you’ll be able to utilise it.

How Can You Prepare for Porting Your Mortgage?

Before committing to selling your current property and purchasing a new one, it’s crucial to assess your eligibility for porting your existing mortgage or obtaining a new one.

Once you confirm your ability to port, initiate the process of selling your current property. However, refrain from making any contractual commitments until you have the details of your new property finalised.

Why Might Porting Not Work Out for You?

Here are a few reasons why porting your mortgage might not be the best option:

1. Borrowing limitations: If you’re moving to a more expensive property, you might need to borrow more money. However, your lender may have restrictions on how much additional funding they’re willing to provide, depending on how close you are to the maximum it will lend you.

2. Multiple loans: If you do borrow more, your lender might require you to take out a separate mortgage product for the additional amount, which could mean higher fees and interest rates.

3. Requalification: When you request to port your mortgage, you essentially reapply for the same deal. Changes in your circumstances, such as being self-employed, earning less, or having increased debt, could affect your eligibility.

4. Limited choice: Porting your mortgage ties you to your current lender, limiting your ability to explore more competitive rates available in the market.

What if Porting Is NOT an Option?

If porting isn’t feasible, you could explore switching to a new mortgage. However, keep in mind that leaving your existing mortgage might incur significant penalties.

Although, if you find that other mortgage options offer more favourable rates, it might be financially prudent to incur these penalties and secure that new deal.

Assess the costs involved, including exit fees and arrangement fees, to determine the most cost-effective option for you.

What to Watch Out For…

Regardless of whether you choose to port your mortgage or switch to a new one, you’ll need to undergo a new mortgage application process. Lenders will scrutinise your financial situation, including your ability to afford repayments and your credit history.

Working with a knowledgeable broker can help you navigate the process and identify the most suitable lender based on your circumstances.

While porting your mortgage can offer convenience, it’s essential to weigh the pros and cons carefully and explore all available options to make an informed decision aligned with your financial objectives.

To discuss this with an experienced broker, click here and book a date and time that suits you.

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