If you are a homeowner with a mortgage from a high street lender, you’ll find that you will probably have the option to port your mortgage if necessary. Porting your mortgage occurs when you are looking to move home part way through a fixed rate deal.
Rather than paying the early repayment charge (ERC), the lender may actually be willing to let you pick up what is left of your current mortgage and move it onto a new property. This of course will depend on the value of where you’re looking to move and is subject to the lender’s discretion.
If the property is worth more than what you will be paying back, you may be able to take out a Second Charge mortgage. You can learn more about those on our YouTube channel MoneymanTV with our video: What is a Second Charge Mortgage?
Portable mortgages work out really well for homeowners who are only part way into their fixed-rate mortgage term but already want to move home. Normally to leave this mortgage early, you would be penalised with an Early Repayment Charge.
If instead you can find another property of similar value and inquire with your lender, there is a good chance they’ll agree to let you port your mortgage to that property. This will mean you avoid the ERC.
You’ll find that there are a lot of mortgages out there that customers are able to port, though it’s important to note that this won’t apply to all of them.
There are some specialist lenders that don’t allow their customers to do this, for example. By contacting your mortgage lender, you’ll be able to determine whether or not this is an option for you.
Though it may be a possible option for some homeowners, in a lot of cases we find that they instead choose to not do this. Some may ride out their term and look to remortgage at the end to release equity for making improvements to their home.
In other cases, homeowners may want to do this but are restricted from doing so, due to being unable to afford to borrow an additional amount if required. Any further advance (second charge) will be at a different rate to the current mortgage deal that you have.
Depending on the rates on offer from your lender for this, it may be more financially viable for you to take the Early Repayment Charge and cut your mortgage short, rather than staying put.
A sub-account on your mortgage will be created when you look to port your mortgage, with the additional funds being taken out on a different deal than your current mortgage is on.
It’s important to remember that although you have a only one mortgage and one direct debit in your name, each will have different rates applied to them.
As time goes on, having a sub-account can be a little problematic. This is because eventually you will reach a point where these products will overlap one another.
In order to get these aligned once again, one of your sub-accounts may have to fall onto the lender’s standard variable rate for some time.
For more information, please feel free to get in touch and speak with a dedicated mortgage advisor in Sunderland. We would love to get started on the next step in your mortgage journey.
Whether you are moving house in Sunderland, need help with a buy to let mortgage or are self-employed and require mortgage advice, we’d love to help you.
We have availability every day of the week, so book yourself a free appointment for when best suits you and we’ll see how we can help.