Porting a mortgage explained

If you have a cheap fixed rate mortgage deal, you may be keen to take it with you when you move house.

Porting means transferring your existing mortgage deal to your new home without being hit by early exit penalties. Rising interest rates and mortgage uncertainty may mean you’re keen to keep your existing deal. Find out if you can (and should) take your mortgage with you.

In this article we look at: 

• Should I port my mortgage?
• How much does it cost to port a mortgage?
• Can I switch mortgage lenders to port a mortgage?
• Can my bank refuse to port my mortgage?
• Mortgage porting checklist

Should I port my mortgage?

If you’re planning to move home, porting your mortgage could let you transfer your existing mortgage debt and avoid being hit by a costly early-repayment charge.

This may be particularly advantageous now that interest rates are near their highest level in around a decade.

The average five-year fixed mortgage rate reached 6.43% in October 2022, according to Moneyfacts. Rates have dipped in the time since, with the average two-year deal now around 5%.

In December 2021, the average five-year rate was 2.64%, according to personal finance website Moneyfacts. This means many households will still be enjoying significantly lower monthly repayments than they would if they took out a new mortgage today.

This creates a serious incentive for many homeowners to port their mortgage when they relocate, along with the fact that it can help them avoid early-repayment fees and exit charges.

For example, if you were tied into a fixed rate for five years and you decided to move house after two years, you would be subject to an early-repayment charge. This tends to be between 1% and 1.5% of the outstanding debt so could run into the thousands of pounds. 

If you port your mortgage, you avoid paying this penalty, as well as removing any possibility of having to pay an exit fee as well.

Not all mortgages are portable, although most mortgage lenders that are authorised and regulated by City watchdog the Financial Conduct Authority do offer them. 

If this is a feature you plan to rely on, check with your bank that porting is an option. Find out more: Best mortgage lenders.

How much does it cost to port a mortgage?

• Porting a mortgage for the same amount of debt

If you are porting exactly the same amount of mortgage debt from one property to another, you will not usually be charged any fees by your lender to do so.

However, if your circumstances have changed (perhaps you’ve become self-employed or now earn less than when you first took out the mortgage), your lender may need more information from you to see if you can still afford the amount you wish to borrow.

Self-employed mortgage rules: what to do

Also, if you took out your mortgage before 2014, the criteria lenders use to judge borrowers has become a bit tighter.

• Porting your mortgage to a more expensive property

When people move home, they are often trading up to a bigger, more expensive property.

You may be looking to take your mortgage deal with you, but unless you have savings to cover the rest of the purchase price, you will need to borrow more money. Your existing lender does not have to agree to this. 

You might already have the maximum loan the lender is prepared to offer. Or after checking your income and credit score, it may decide that you cannot afford to borrow more. 

If that is the case, you would not be able to port your mortgage and apply for a top-up loan. Another lender may be prepared to offer you the money, though.

• Porting a mortgage to a cheaper house

If you are downsizing, you will repay some of your mortgage debt. This could mean you wind up forking out for an early-repayment charge anyway, which could make porting pointless. 

Mortgage lenders’ terms and conditions vary, but some allow you to make a partial repayment of your debt penalty-free if you are porting. 

Ask your lender to explain its rules to avoid any nasty surprises.

Can I switch mortgage lenders to port a mortgage?

If you are able to go ahead and port a mortgage, you can only choose a mortgage product from your existing lender. There is no option to shop around when you are porting.

That could mean you miss out on the cheapest interest rate on the market.

There will also usually be:

• A valuation fee to pay for checks by the lender on the new property
• An arrangement fee if you take out an additional mortgage

With two loans, you may also end up with two different periods for early-repayment charges, which will make it difficult to remortgage to a single loan in the future. 

“Porting a mortgage provides a solution that could work well for many people, but it is not a guarantee that is set in stone.

Example of porting a mortgage

Here is a mortgage-porting example, from broker L&C Mortgages, showing how you can line up having two different borrowing periods. 

You have a £150,000 mortgage at a rate of 2.50% fixed for five years. After two years, you decide to move house and need to borrow an extra £100,000 to buy the new property. 

Your bank agrees to give you the top-up mortgage. To marry up your old deal, which has three years left to run, with your new one, you take out a three-year fixed rate at 4%.

Now your new mortgage is made up of two elements:

• £150,000 at 2.50%    – £794.85 per month

• £100,000 at 4%         – £606 per month

The repayments on your mortgage will now be £1,400.85 a month – and after three years, both early-repayment charges will expire, and you can remortgage onto one deal with one interest rate.

Can my bank refuse to port my mortgage? 

“Porting a mortgage provides a solution that could work well for many people, but it is not a guarantee that is set in stone,” warns David Hollingworth at L&C.

For example, say you took out a 10-year fixed rate mortgage deal and then five years down the line you decided to move house. There is no guarantee that you will meet the mortgage lender’s criteria at that point in the future to take your existing mortgage with you.

Reasons a lender could refuse to port a mortgage

• If your family has grown since taking out the mortgage, regular expenses such as childcare could mean you no longer meet the bank’s affordability criteria
• Or the bank may not be accepting overtime or bonus pay any longer, which may mean you do not have an income large enough to pass the affordability checks
• You have recently had a drop in income, or change profession or become self-employed

Don’t panic if the above apply to you. If you have kept up to date with mortgage payments and you still have a good credit rating, lenders can use their discretion and allow you port your mortgage. But any additional borrowing could be refused.  

Find out more: Should I use a mortgage adviser?

Mortgage porting checklist

Decided you want to port? Here’s how to prepare:

• Call your lender to check that your mortgage is portable
• When does your mortgage deal expire? If there is not long left before your early-repayment charge expires, it might be better to wait
• Find out if you can borrow more. That way, you will know if you can port your mortgage to a more expensive property.