Understanding the Process of Porting your Mortgage.

If you’re a contractor looking to move to a new property, you may have heard the term “porting”. But what does it mean, and how does it work? In this article, we’ll dive into the process of porting you mortgage and why it can be beneficial for homeowners.

What is Porting?

Porting a mortgage is the process of transferring your existing mortgage from one property to another. This means that you can take your current mortgage deal with you when you move to a new home.

This option potentially allows homeowners to avoid paying early repayment charges and could help you secure a better interest rate on the mortgage.

How Does Porting a Mortgage Work?

As a contractor, when you decide to move to a new property, you will need to apply for a new mortgage. However, instead of paying off your existing mortgage and taking out a new one, you may be able to transfer your current mortgage to the new property.

Your current lender will access you new requirements in much the same way as a new application. They will then assess your eligibility and affordability taking into considerations such as your current mortgage balance, the value of your new property, your contractor status and your financial situation.

If you are approved for porting your mortgage, your lender will transfer your existing mortgage product to the new property. If you require additional borrowing then this will typically involve you selecting a new product from the lenders current product range for the extra funds.

Benefits of Porting a Mortgage

There are several benefits to porting a mortgage as a contractor, including:

  • Avoiding Early Repayment Charges: When you pay off your mortgage early, you may be subject to early repayment charges. By porting your mortgage, you can avoid these charges and save money.
  • Securing a Better Interest Rate: If you have a good interest rate on your current mortgage, you can transfer it to your new property and potentially save money on interest compared to the lenders new product range.
  • Simplifying the Process: Porting a mortgage can make the process of moving to a new property easier and less stressful.

Things to Consider Before Porting Your Mortgage

While porting a mortgage can be beneficial, there are some things to consider before making the decision. These include:

  • Eligibility: Not all mortgages are eligible for porting. Even if you current product is portable, your lender will still assess your eligibility based on factors such as your current mortgage balance, the value of your new property, and your financial situation.
  • Additional Fees: While you may avoid early repayment charges, there may be other fees associated with porting your mortgage.
  • Interest Rates: While you may be able to secure a better interest rate by porting your mortgage, this is not always the case. It’s important to compare rates and consider all options before making a decision.
  • Your lenders view on your contractor status. If you were in a perm position when you first applied for the mortgage, your mortgage lender may not have a contractor policy.

Alternatives to Porting a Mortgage

If you are not eligible for porting your mortgage or it is decided that it’s not the right option for you, there are alternatives to consider. These include:

  • Taking out a new mortgage: You can choose to pay off your existing mortgage and take out a new one for your new property. This will involve going through the application process again and potentially paying early repayment charges.
  • Renting out your current property: If you are unable to sell your current property, you can choose to rent it out and use the rental income to cover your mortgage payments. This will allow you to take out a new mortgage for your new property. It is important to understand you will need too seek permission from your current lender to let the property or you risk breaching the conditions of you current mortgage.
  • Selling your current property: If you are unable to port your mortgage and do not want to rent out your current property, you can choose to sell it and use the proceeds to pay off your existing mortgage.

In Conclusion

Porting a mortgage as a contractor can be a beneficial option for homeowners looking to move to a new property. It potentially allows you to avoid early repayment charges and secure a better interest rate. However, it’s important to consider all factors and alternatives before making a decision. By understanding the process of porting mortgages, you can make an informed decision that is best for your financial situation.

At My Contractor Broker we have a team of dedicated contractor specialist ready to assess all the options available to you. You can calculate how much you can borrow using our contract mortgage calculator below or contact us on 02394 211122.

#get in touch

Ready to get started ?

Speak to a MyContractorBroker specialist on 02394 211120

#get in touch

Ready to get started ?

Speak to a MyContractorBroker specialist on 02394 211122

Scroll to Top