Did you know that you can move your mortgage rate from your current home to a beautiful new Avant home?
This is called porting a mortgage and is an excellent option for those with an existing mortgage and an interest rate they want to keep who want to move quickly and efficiently into one of our new builds.
And as interest rates on new mortgages can often fluctuate, it makes perfect sense to take a good mortgage rate with you via mortgage porting.
The process of porting a mortgage means staying with your existing lender and keeping your current mortgage rate when you buy your new home.
When you move, your existing mortgage will be paid off with the money from the sale of your home. Once that’s done, your lender will apply your interest rate and extras from your old package when creating your new mortgage for your new home.
This isn’t technically a direct transfer of the loan itself but instead allowing you to take the deal you are already on, meaning you will still need to reapply for a mortgage loan and meet your lender’s criteria.
It’s also a little bit different if the new build home you want to buy is worth more, but don’t worry, we cover that directly in the section below.
Often referred to as porting with additional borrowing, porting a mortgage to a more expensive home comes with a few more checks.
For instance, your lender will have to confirm that you can afford the new home by re-evaluating your personal circumstances and running an affordability check.
Furthermore, your lender is likely to only apply your old mortgage rate to the amount you currently owe, meaning any extra money on top of your current borrowed amount will be part of a new mortgage product or deal. This will mean the additional amount you borrow will be on a different rate to the mortgage you’ve ported.
Example: Your current home is worth £300,000, and you owe £200,000 on your mortgage, leaving £100,000 in equity.
If the new home you want to buy is worth £400,000, you can move (or ‘port’) your existing £200,000 mortgage to the new property, keeping the same rate. You’ll then need another £200,000 to complete the purchase.
You can use your £100,000 equity towards this, leaving you with a need to borrow £100,000 on a new mortgage deal.
This means you’ll repay £200,000 on your old rate and £100,000 on a new one, which is usually cheaper than taking a full £300,000 mortgage at a new rate.
Yes, porting a mortgage to a cheaper house is an option, and comes with an additional benefit.
That’s because if you are thinking of downsizing and porting a mortgage to a cheaper house, you may be able to pay back some of what you owe to your mortgage lender.
Example: Your home is worth £400,000 and you owe £300,000 on your mortgage, leaving £100,000 in equity.
If the new home you want costs £300,000, you can move £100,000 of your current mortgage to the new property, using the £100,000 equity from your sale to reduce what you owe.
That means £100,000 of your old loan isn’t needed anymore. Depending on your lender’s terms and conditions, you may have to pay an Early Repayment Charge (ERC) on that amount, which tends to be somewhere between 1-5%
And if you’re wondering, lenders charge ERCs because your mortgage is designed to run for a set term, meaning that if you repay some of it early, the lender loses expected interest, charging you a bit extra to help cover that cost.
As you can see, there are many advantages to porting a mortgage, especially if your current mortgage rate and agreement is already ideal for you.
Porting a mortgage is also a quicker process compared to applying for a brand-new mortgage, since your lender already has a lot of your information to hand.
Therefore, if you’re interested in porting your mortgage, speak to one of our helpful Sales Advisors. They can then put you in touch with one of our recommended new build mortgage specialists, who can guide you through the entire process.
This completely depends on your current mortgage rate and whether you are happy with it. If you feel you can get a better deal elsewhere, then shopping around makes a lot of sense. Have a look at current interest rates on mortgages and compare them to what interest rate you have. If you believe you still have the best rate for your situation and your lender allows you to port it on a new build home, then this might be the better option for you.
Since every lender has different terms and conditions when it comes to mortgage porting, we recommend speaking to both your current lender and one of our recommended new build mortgage specialists to help work out what the best solution is for you.
If your lender allows you to port your current mortgage rate onto your new build home, then it tends to be a straightforward operation. While you do need to reapply for a mortgage, your lender already has all your details, which always speeds up the process.
