Is Remortgaging the Same as Porting Your Mortgage?
If you have an existing mortgage, you may have heard about remortgaging or porting your mortgage. When these two terms are explained, they can have similar outcomes leading to confusion about the differences between porting and remortgaging.
Although the outcomes may be fairly similar, porting and remortgaging are two completely different processes, and you will need to work out which option is best for your circumstances. Sometimes porting is a valuable lifeline and other times a remortgage will be the best option.
This guide looks at porting and remortgaging, explains the differences and helps you understand what option might be best for your situation. Let’s get stuck in.
- What is Porting?
- How Does Porting a Mortgage Work?
- What Makes Porting a Good Idea?
- When is Porting not a Good Idea?
- How to Port a Mortgage
- What is Remortgaging?
- How Does Remortgaging Work?
- What Makes Remortgaging Attractive?
- When Should I Consider Porting instead of Remortgaging?
- What if I am Still Unsure Whether to Port or Remortgage?
What is Porting?
The act of porting your mortgage is to move your existing mortgage from one property to a new property. Most lenders will allow you to port your mortgage without early repayment charges providing the new property meets the security and product requirements for your mortgage.
Some lenders don’t allow porting and you will need to check your mortgage paperwork to see if porting is an option with your mortgage. In your mortgage paperwork there should be a specific section from your lender about their porting policy and even if they don’t allow you to port, it is normally clearly stated in your documentation.
How Does Porting a Mortgage Work?
To port your mortgage, you will need to contact your mortgage provider or your mortgage broker. It is preferable to discuss porting with your mortgage broker before committing to porting your mortgage as there may be other more suitable options available to you.
Once you have decided to port your mortgage your lender will have a porting process in place that enables you to complete the application. This process will consist of property checks to ensure the value of the property is in line with your product’s mortgage criteria and the property itself is a suitable security for the lender.
Lenders have strict property criteria so you should assume that your lender will only allow you to port your mortgage to a similar property with similar construction materials. If you have a property of standard construction (brick with a slate or tile roof) you should aim to move to a property of standard construction. Most lenders will not allow you to port a mortgage from a standard construction property to a non-standard construction property unless they specifically state otherwise in their criteria.
What Makes Porting a Good Idea?
Porting can be a lifeline if you are tied into a mortgage deal that has Early Repayment Charges but you want to move home. There are a few reasons why you might want to move during a mortgage deal but most commonly it is because you don’t get on with your neighbours or your neighbourhood is not what you had in mind.
Rather than be stuck in a bad living situation, porting allows you to essentially pick up your existing mortgage deal and move it to a new property. This removes the necessity to pay any Early Repayment Charge.
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When is Porting not a Good Idea?
Porting may be a bad idea if you are not tied into a mortgage deal. If your deal has ended and you are on the lenders’ Standard Variable Rate, it rarely makes sense to port your mortgage.
Instead, you should usually look to remortgage onto a new mortgage deal and keep your monthly mortgage costs as low as they can be. Even if you have a mortgage deal with an Early Repayment Charge, you may find the mortgage market itself has changed so much that paying the Early Repayment Charge and remortgaging could save you money overall.
In these rarer circumstances, you should remortgage rather than port your mortgage if possible. You should not assume because you have a mortgage deal that it is the best option for you, and you should periodically review your mortgage. If you use a mortgage broker, like Boon Brokers, they will typically check in every two years to ensure you are getting the best value for money.
With mortgage deals up to five years available from lenders, these periodic two-year reviews can be invaluable and can save you a lot of money if something more opportune comes up during your deal.
How to Port a Mortgage
To port your mortgage, contact your mortgage broker or mortgage provider. They will outline the next steps and oversee the porting process for you. Most porting is penalty free, for example, you won’t need to pay Early Repayment Charges, however there may be other expenses you encounter when porting a mortgage:
- Survey fees on the new property
- Conveyancing fees
- Any additional deposit needed to secure the new property on your existing mortgage deal.
Some brokers charge advice fees for their services. If you want to avoid these fees you should use Boon Brokers. Boon Brokers offer FREE, no obligation mortgage advice.
What is Remortgaging?
Remortgaging is the process of arranging a new mortgage to replace your existing mortgage on the same property. This can be with the same lender or with a new lender. If one mortgage ends and another begins you have remortgaged. A remortgage with the same lender is also known as a Product Transfer.
When you remortgage, the new lender will pay the old mortgage lender the amount outstanding on the old mortgage. The new lender will then extend that amount to you as your new mortgage.
Bear in mind if you have an Early Repayment Charge this will need to be paid in addition to your remortgage. If you have enough equity, you may be able to offset this Early Repayment Charge in your new mortgage.
Remortgaging with an Early Repayment Charge should always be approached with an element of caution, and you should discuss your mortgage product in full with a mortgage broker before committing to remortgaging.
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How Does Remortgaging Work?
When you remortgage, your broker will approach your mortgage in the same way as your initial mortgage application. The process is more streamlined compared to a mortgage application on a new property as your broker will know details about your property and be able to source lenders that fit your property type.
Your mortgage broker will still need to update their fact-find on you which does mean you will need to provide answers to various questions again. Circumstances change over time and unfortunately with mortgages, even a slight change can impact a mortgage application.
The mortgage deal itself will be known to your broker and they can compare your existing mortgage deal with other deals. If your deal has ended, a broker will source the best possible deal available to you on the market.
Some mortgage brokers have limited market access and you may find one broker can’t compete with another because the range of deals at their disposal are different. We are a Whole of Market mortgage broker with has access to a diverse range of lenders that represent every aspect of the UK mortgage market.
What Makes Remortgaging Attractive?
If your deal has ended and you are paying your mortgage providers’ Standard Variable Rate, it is almost always best to remortgage onto a new mortgage deal.
Remortgaging allows you to get the best mortgage product for your circumstances. Normally this will be the cheapest mortgage deal available, but it might not be. For example, you may wish to move property in two years and the cheapest product is a five-year fixed rate deal.
Instead of recommending a five-year deal your broker may recommend a two-year deal as that is most applicable to your circumstances (even if it is dearer). When a mortgage broker makes a recommendation, they will clearly outline why they have provided that advice including whether they found other products which were cheaper and why these were unsuitable.
By remortgaging every time your deal is ending so each deal runs on concurrently, you are ensuring you get the best mortgage product possible, and it could save you many thousands of pounds over the entire mortgage term.
Remortgaging isn’t just about monthly cost. You might want to reduce the term of your mortgage because you have a higher disposable income and wish to clear the mortgage sooner.
In short, there are a plethora of reasons why remortgaging can be an excellent idea. It is always best to discuss everything with an expert like Boon Brokers who can advise you further.
When Should I Consider Porting instead of Remortgaging?
Porting a mortgage is normally a better idea when you have an Early Repayment Charge that can’t be offset by the savings of remortgaging. For example, if you have an Early Repayment Charge of £10,000 on your mortgage and remortgaging doesn’t save you the amount it would cost to pay the charge.
If you are moving property, you will find the fees are similar for both porting and remortgaging. The decision whether to port or remortgage comes solely down to your exact personal situation.
What if I am Still Unsure Whether to Port or Remortgage?
Understanding the complexities of porting or remortgaging can be difficult. If you are not sure about which option suits you best a mortgage broker can look at your circumstances and provide advice.
The Impartiality of Mortgage Brokers
It might be tempting to contact your lender directly to ask whether to port or remortgage. You should remember your lender will only have their products to offer you. The recommendation that a lender’s mortgage adviser gives you might be the best when considering their range of products but not the wider market.
For example, a lender might have an uncompetitive range of product transfer options. From those options, they may recommend porting. However, taking a mortgage with a different lender may result in a more favourable mortgage product selection.
By approaching a whole of market mortgage broker, you get the same level of expertise as approaching a lender directly, if not better, but with a wider pool of products to source from. This means a mortgage broker can provide advice that benefits you compared to a lenders’ mortgage adviser. Whole of market mortgage brokers are impartial. They advise based on the facts of your situation and match a lender (whoever that may be) who is best for you.
Boon Brokers is a UK-based Whole of Market Mortgage, Insurance and Equity Release brokerage, providing tailor-made advice and recommendations, including a comparison of porting and remortgaging. We don’t charge you a single penny and there is no obligation to accept our recommendation either. Are you ready to discuss porting or remortgaging? Complete our form to request a callback today.