With rising interest rates, if you’ve got a good deal on your mortgage, you might want to find out more about mortgage transfer. This is sometimes called ‘mortgage porting’, allowing you to transfer your mortgage to another property.
It sounds straightforward but, as with all things about house buying and selling, it can be more complex than you think. Here we take you through everything you need to know about mortgage transfer and help you weigh up the pros and cons so that you can decide if it’s best for you.
Can I transfer my mortgage to another property?
The short answer to this question is ‘yes’ – it is generally possible. Most mortgage lenders allow you to undertake a mortgage transfer, or port your mortgage from one property to another. Technically you aren’t moving the actual mortgage, but you are able to transfer the existing terms, e.g. length remaining, interest rates, etc.
However, you do need to double check if a mortgage can be transferred to another property rather than assuming so. There are some which can’t be. In this instance you’ll need to apply for a new mortgage. Unfortunately, at the moment this means that you are unlikely to get such a good deal as interest rates are forecast to rise further.
Additionally, if you are currently on a fixed term mortgage you will need to check with your provider whether you can transfer your mortgage to another house, as there may be fees to be paid to exit the mortgage in the middle of a fixed term.
How to transfer your mortgage to another house
Once you have established if you can do a mortgage transfer, it is then about how to transfer a mortgage to a new property. In a nutshell, you effectively repay the mortgage on your existing property so that you can complete the sale. You then renew it on the new property with the same terms and conditions, transferring the mortgage from one property to another.
As such, you still need to ask the mortgage provider if they will lend to you again, including on the same terms and conditions. Even though they are likely to say yes, you still have to reapply in order to satisfy the lender’s eligibility criteria. This means that once again, the lender will scrutinise your income and outgoings to determine affordability, as well as complete a valuation of the new property. They’ll do new credit checks too.
How to transfer a mortgage to a new property in simple steps
1. Check your mortgage is portable
Check the T&Cs of your existing mortgage. It should say if your mortgage can be transferred. If in doubt, contact the lender directly.
2. Consider if it’s beneficial to do a mortgage transfer
At the moment, with interest rates rising, it may seem a no-brainer to try and transfer your existing mortgage deal. However, this is far from guaranteed. Instead, you need to consider the advantages and disadvantages of doing so, including considering other mortgage deals that are available. There may be more competitive rates or it may make sense to port to prevent hefty repayment charges if you currently have a fixed deal.
3. Get professional help and support
It’s not necessarily easy to work out what is best and your lender cannot give you unbiased information. As such, a professional mortgage broker can help you consider your different options. They can help you work out if porting is sensible or whether exiting the mortgage and taking a new deal, potentially with another lender, is best.
4. Work out new repayment figures
When you move to a new property, with the addition of fees and perhaps extended borrowing, it is likely that your monthly payments will change. Do some calculations at this stage to work out what these will be.
5. Complete all the necessary paperwork
Unfortunately, undertaking a mortgage transfer will involve lots of forms and steps! Your lender will require up to date information on things such as earnings and outgoings, as well as renewed authorisation to undertake credit checks. We recommend checking your credit reports before applying so that any potential issues can be fixed beforehand.
Can I transfer my mortgage to another property if the property is more expensive?
There are no rules to say that you have to borrow the same amount when you do a mortgage transfer. You can move to a more expensive property, investing additional capital or equity, or taking on additional borrowing.
It may be trickier to borrow more on the ported mortgage. This will depend on a number of factors including how close you are to the maximum amount the lender is willing to lend you. The lender could potentially insist that the extended borrowing uses a separate product which may be more costly and involve arrangement fees.
Can a mortgage offer be transferred to another property that is cheaper than the existing one?
Yes, a mortgage offer can usually be transferred to another property that is cheaper than the original property. This is usually a simpler process, but it will still require a new valuation and application process.
The pros and cons of mortgage transfer
Whether a mortgage transfer is a good idea will always depend on individual circumstances. However, there are some pros and cons.
Porting a mortgage can help you avoid an early repayment charge if you currently have a fixed mortgage. These fees can be incredibly high, so this is often a key benefit. Furthermore, transferring your mortgage may be a good idea if you’re currently on a competitive rate. This could be particularly true at the moment with rising interest rates. What’s more, you may not be stung with new mortgage arrangement fees. Staying with your existing lender also allows you to benefit from a good existing track record.
However, do check that you won’t miss out on more competitive rates and the cost-effectiveness of different options. Even with fees, it may still work out better to change deals or providers. If you need to borrow more money, weigh up how much more this will cost if your lender insists on a particular deal.
At Stanfords we support you through the entire selling and buying process. Please get in touch.