Mortgage porting

Borrowers may forget they can port their mortgage or find it difficult and therefore not consider it when moving home. The feature offers considerable advantages. Retaining a low interest rate without incurring early repayment charges is beneficial, particularly for those who secured a long-term fixed rate before more recent rate rises. Some lenders also allow mortgage porting even when current affordability criteria are not met, as long as the loan balance remains equal or lower. This can be helpful for clients with recent changes in income, such as a transition to self-employment. Porting may not be suitable for all clients. If the new property isn't acceptable to the lender due to factors such as large acreage, outbuildings or an annex, porting might not be an option. Additionally, some lenders may reassess affordability and not grant the required loan.

When a client is within the early repayment charge period of their current mortgage, looking at their porting options should be the first thing you do. Paying an ERC is going to wipe out any savings you make by switching to a new deal elsewhere unless it has a substantially lower rate and little or no set-up fees. Only once you have ruled out porting as a viable option should you then look at other mortgage deals. With the growth in five-year, or longer, fixed-rate deals in recent years I can see the need to port mortgages growing, but that's fine as most lenders are set up for this, with the exception of a few who have spent all their time and budget on making a great front end/new business system, but done little to help existing clients moving home. The main two reasons I end up not porting a client's existing deal are due to affordability, where the current lender will not lend enough but another will, or the current lender won't accept the new property for some reason.

Porting your mortgage, that much discussed at point of sale but rarely used feature for UK mortgage accounts. The benefits of porting are clear, you are tied in say to a 5-year fixed rate in your new home and that lovely property that you were gazumped over before you bought your current home, has now come available again. You think the wife has been using her Ouija doll on that couple that paid the extra monies for your "dream home" and now they seem to be splitting up and you have a second chance in buying it, but you're tied in until the end of your 5 year fixed period. You speak to your lovely adviser at www.MortgageShop.com and he blows the dust off of your mortgage offer and reminds you that he had the foresight to choose a deal that had a portable inclusion and immediately makes a move towards his bic biro to get things moving for you again. Probably 90% of lenders allow this, sadly though applicants just don't remember it - meaning it rarely gets used.

We are finding porting now more popular than ever, with many wanting to move and still being tied into rates which are considerably better than current and enabling them to not receive any Early Repayment Chargers (ERC's) it's a great weapon in any broker's arsenal.

We haven’t seen a rise in porting recently, but that doesn't mean it isn't coming. Keeping a low interest rate is obviously an attractive option for many.

The good thing about porting is it can save clients money by avoiding paying an early repayment charge, ERC. So it’s a great choice in the right circumstances.

Having said that, we always suggest customers don’t rely on it when they’re going through the features of a mortgage product. The fact is, it requires the lender to give the green light. But if the new property doesn't meet their criteria for some reason, say if the building type, loan amount or affordability of the new property aren't right, it won’t happen.

Also, there’s usually a porting fee, so there’s that to look at too.

In the end, we’d only recommend it if the numbers stack up. Sometimes it’s better to pay the ERC and find a better rate elsewhere. And although porting as such isn’t getting more popular so far, many lenders offer it.