What’s the difference between porting and remortgaging?

When the time comes to upgrade to a new family home or relocate for work, you’ll likely have questions about your existing mortgage. You have the option to either port your mortgage or remortgage. But what’s the difference between porting and remortgaging, and how do you choose which one is best for you?

This guide outlines the differences between porting and remortgaging, to give you a clearer idea of which one might suit you best. However, you can always contact us to speak to an experienced mortgage adviser.

What is porting?

Porting a mortgage involves repaying your existing mortgage and taking the same terms with your current lender. Essentially, you’re taking a new loan, but the new one will work to repay your current mortgage off so you’re starting over again with the new house.

The application process for porting your mortgage is similar to the first time you applied for a mortgage. You’ll be required to disclose your income, financial commitments, and will be subject to further credit checks.

Why should I consider porting my mortgage?

If you need to buy a new home but already have an existing mortgage, porting it is one option available to you. This choice might suit you if you’re still in the fixed term period of your existing mortgage as you potentially may not face any early repayment charges.

Porting is also an attractive option, especially if you’re benefiting from an exceptionally good deal with low interest rates and great terms. And even more so, if the deal no longer exists to new customers anymore. By staying with your current provider, they can offer the same deal you’ve already been on, even if it’s no longer available to new applicants.

Are there disadvantages to porting a mortgage?

Porting a mortgage isn’t suitable for everyone. If you’re moving to a more expensive property, this could mean applying for a larger loan amount when porting your mortgage. Should the lender doubt your ability to meet affordability criteria, they may decline your application.

If you’re eligible to borrow an additional amount on top of your original mortgage, you may need to take out two separate loans. These loans will have different rates to reflect the term of your current deal and your new deal.

This dual loan can complicate matters should you decide to switch to another provider in the future, if you choose to remortgage. Additionally, it could also incur additional arrangement and early repayment fees too.

Finally, porting your mortgage still means you need to apply in the same way as you would for a new loan. Any changes in your circumstances since obtaining your original mortgage — such as you’re earning less or have more outgoings — could lead to rejection by your existing lender.

What is remortgaging?

If you’re not sure whether porting your mortgage is the best option, you might want to explore the possibility of remortgaging instead.

Remortgaging involves securing a new mortgage deal with a different lender. Your new mortgage provider pays off your old mortgage, so you’re then responsible for making your monthly repayments to the new provider.

Unlike porting your mortgage, remortgaging allows you to select from the entire remortgage market and take advantage of the great deals available, rather than staying with your existing provider. However, you should be prepared for potentially significant costs such as early repayment charges, arrangement fees, and charges for your new home loan.

When should I remortgage?

Remortgaging is often a good idea when your current mortgage’s fixed term deal has already ended or is coming to an end. Attempting to remortgage before this period may result in substantial charges, potentially up to 5% of the remaining loan amount.

However, if you’re already out of your fixed term deal period, switching to a new provider during the home moving process can substantially reduce your long-term mortgage costs.

It’s important to note that both porting and remortgaging require passing credit and affordability assessments before lenders will agree to a home loan.

Get expert advice to help you decide…

Before you apply to port your mortgage or to remortgage, we recommend seeking expert advice. A mortgage adviser will be able to talk you through the details of the options available to you. Their impartial advice and recommendations can help you to find the most suitable option and mortgage deal for your circumstances.

Book your appointment online with a member of our team today to discuss your options or simply call us on 01634 968111.