Mortgages and porting

Porting is a very useful feature on many mortgages, allowing you to transfer your current balance and rate to a new property and so avoid paying the Early Repayment Charge if you were to break out of the deal early. You can also borrow additional mortgage money to top-up to the required loan amount to fund the new property purchase, if needed. However, whilst many lenders have slick online systems for new business many have not built such great functionality for porting and top-ups, some are great, many are clunky and a few a paper-based, a very few will only deal with clients direct for a port! One issue that is now appearing as rates rise is the dilemma of; do I pay the ERC and move to a new lender with ALL my mortgage on a new 5-year fixed rate (for example), or do I port and avoid the ERC but then have a proportion of my mortgage come off it's fixed rate in say 12 months time? What will rates be like then? Would I have been better off paying the ERC and securing a fixed rate when I initially moved? Each clients situation will be different, but it's a conversation I'm having now that didn't really crop up before with porting applications.

Like many, we've seen a huge increase in clients looking to move midway through a mortgage deal. Although we make our initial recommendations on our client's future plans and aspirations, with house prices reaching record highs it's leading more customers to want to try and capitalise on the profit they have made on their homes sooner. The biggest issue for customers is the ever-changing criteria from lenders. Just because a lender was willing to provide a mortgage in the first instance doesn't mean they will be happy to lend enough for the next property, putting the customer between a rock and a hard place of not moving to the house they have set their heart on or often incurring thousands of pounds in early repayment charges to enable them to go with a lender who will provide that mortgage. Even if a client could port their mortgage the long-term issue is they will likely end up with two parts that run for different fixed periods. This leads to either the client being limited to staying with that lender for the long term duration or having to face incurring early repayments charges or a period of time on a variable rate in the future to bring the mortgage all together again which will result in costing the customer more in the long run.

Mortgage porting tends to be a last resort, reserved for those needing to move home but stuck with a hefty early repayment charge. However, it's always best to speak with an adviser to assess what the best and cheapest option is for your given scenario. The difficultly with porting is that the current mortgage lender might not offer the best deal on the new property, so sometimes paying a small ERC can work out better overall. Alternatively, you might not be able to borrow the amount of mortgage needed from the current lender, which can result in a more difficult decision whether to move now or not.