Porting a mortgage: keeping your rate when you move

Porting means transferring your existing mortgage product, including its interest rate and remaining deal period, from your current property to the one you are buying. It exists mainly so that moving does not force you to pay an early repayment charge. Most residential mortgages are portable, but portability is a feature of the product, not a guarantee of approval. You have to make a fresh application, meet the lender's current criteria, and get the new property valued and accepted.

Technically the old mortgage is redeemed and a new one is created against the new property, with the same product terms carried across. The lender then either refunds or waives the early repayment charge on the amount ported.

That is why porting is often described as an application rather than a transfer. Everything gets checked again. Your income, your credit file, your commitments, your affordability, the property itself.

Two consequences follow. First, a change in your circumstances since you took the mortgage can sink a port even though nothing about the loan has changed. Redundancy, going self-employed, a new car finance agreement, a dip in your credit score, a partner leaving the mortgage. Second, the property has to be acceptable to the lender. Flats above commercial premises, non-standard construction, short leases and properties with cladding issues can all cause a port to fail on the security rather than on you.

Some lenders also charge a fee for the new application, and you will normally pay valuation and legal costs as on any purchase.

Most people move up, so they need a bigger mortgage. This is where porting gets slightly technical.

You cannot simply extend the ported rate over the extra borrowing. Instead the lender splits the loan into sub-accounts. The ported amount keeps its original rate and its original end date. The additional borrowing takes a rate from the lender's current range, with its own product terms and possibly its own end date.

Say you have 150,000 pounds left on a fix at an assumed 3.2% with three years to run, and you need 250,000 pounds for the new house. You port the 150,000 at 3.2% and take 100,000 pounds as additional borrowing at, say, an assumed 4.8%. Those rates are illustrations, not current market rates.

Your overall cost sits at a weighted average of about 3.84%, but you will usually see two lines on your statement and, in some cases, two separate payments. The effective blended rate is a useful way to compare the port against a single new mortgage across the whole 250,000.

Watch the end dates. If the ported part runs out in three years and the additional borrowing is fixed for five, you are misaligned. When the ported part matures you either take a short product to line the two up, or you accept that you will always be juggling two deals, one of which may sit on the standard variable rate while you wait for the other. Ask the lender whether they can offer a matching or shortened term on the new part.

Also check whether the additional borrowing is priced at the LTV of the whole loan or on some other basis, because that can change the rate meaningfully.

If you are moving somewhere cheaper and need less mortgage, you can usually port part of the balance and repay the rest. The catch is that the repaid portion typically attracts an early repayment charge, because you are redeeming part of the deal early.

On a 200,000 pound balance where you only need 140,000, the 60,000 pound reduction could attract the charge at your current percentage. At 3% that is 1,800 pounds. Some lenders are more generous than others here, and a few will waive part of it, so ask before you assume.

The clean case is a simultaneous completion, where you sell and buy on the same day. Porting is designed around that.

If there is a gap, most lenders operate a porting window. You sell, redeem the mortgage and pay the early repayment charge, and then if you complete on a new property within the window the lender refunds the charge and reinstates the product. Windows vary widely between lenders, commonly running from around 30 days up to six months, and a few lenders offer no window at all.

Three practical points. You need the cash to pay the charge up front and wait for the refund, which can be a significant sum. The product you get back is the one you had, but you still have to qualify at the point of the new application, and the lender's criteria may have changed in the meantime. And the window is usually measured from the date of redemption, not from exchange, so confirm the exact start point in writing.

If you are selling first and renting for six months while you look, check the window length before you commit to that plan. It may be the deciding factor in which order you do things.

Porting is not automatically the right answer. It is worth doing the comparison properly.

• If current rates are lower than your existing rate, porting preserves a rate you no longer want. Work out whether the early repayment charge is smaller than the saving over the remaining deal period.
• If you need to borrow substantially more, another lender may offer a better rate across the whole amount than your existing lender offers on the top-up slice, and may lend more.
• If your existing lender's criteria no longer fit you, for example because you have become self-employed or have adverse credit, a specialist lender may be the only realistic route regardless of the rate.
• If the new property is one your lender will not accept, the decision is made for you.
• If the ported deal has only a few months left, porting adds complexity for very little benefit.

Run the numbers as a total cost over the period, including the early repayment charge, product fees, valuation and legal costs on both routes. A port that keeps a rate one and a half points below the market for another three years is usually worth a lot. A port that keeps a rate half a point below the market for eight months usually is not.

Before you offer on a property, ask your lender whether the product is portable, what the early repayment charge is and when it steps down, whether there is a porting window and how long it runs, whether they will lend the additional amount you need, and how they price additional borrowing.

Then get a decision in principle for the port and any additional borrowing early. A port that fails at the underwriting stage, three weeks before exchange, is one of the more stressful ways a chain collapses.

Keep your financial position stable during the process. New credit agreements, changing jobs or a run of unusual spending can all affect the fresh assessment.

If you want the port and remortgage routes compared side by side, including the ERC and the blended cost of any additional borrowing, an FCA-authorised broker from the MortgageMatch directory can price both before you commit to a move.