Borrowers could save money by porting their mortgage deal
Home movers looking to make the most of current low interest rates could be missing a trick by not porting their mortgage deal, says Yorkshire Building Society.
Brits move on average eight times in their lifetime[i] but according to data from the mutual, only 6% of the Yorkshire’s customers who moved house applied to port their mortgage deal in 2017.
Porting may sound technical but simply means transferring your existing mortgage deal from your old home to your new home, so your existing deal becomes part of your new mortgage.
Figures from a survey[ii] of homeowners conducted by the Yorkshire revealed that a competitive rate is the main driver for borrowers, with 73% of those surveyed indicating the amount of interest they will pay is the most important feature when it comes to choosing a mortgage.
lmost one in two (47%) respondents who do not intend to port believed they would get a better interest rate if they took out a completely new mortgage deal.
However borrowers may end up paying more by disregarding porting their mortgage deal without looking at the facts as it could be a good money-saving option, especially if a borrower is part way through a mortgage deal that has exit fees or early repayment charges.
In addition the costs incurred with getting a new deal, including product fee and paying early repayment charges on any existing deal may mean it is more cost effective to stay with your current lender and port your existing mortgage interest rate.
Porting allows a borrower to take out a new mortgage with their existing lender but keep their current interest rate on the same amount of borrowing as their existing mortgage, which could be beneficial if interest rates rise.
Chris Irwin, Senior Mortgage Manager at Yorkshire Building Society, said:
It’s clear that borrowers are keen to secure the best rate, especially when they move home, but getting a lower rate than your existing mortgage may not always mean you are getting the better deal overall.
We are seeing a growing trend in borrowers locking into longer term deals, perhaps due to recent political and economic uncertainty plus a potential upward trend in interest rates.
However, life never remains static, so porting could be a good option for people looking to move either up or down the property ladder and retain their current mortgage deal.
The majority of our mortgages are portable. Borrowers, however, should contact us before making any decisions on moving as individual circumstances may affect the ability to port.
[i] Zoopla worked with property analysts Hometrack to calculate the average time between house moves by dividing the total private dwelling stock levels (ONS data) by the number of total property sales in 2016 (Land Registry data).
[ii] The survey was conducted by RFI Research on behalf of Yorkshire Building Society as part of the wider UK Mortgage Council survey during November and December 2017.