The word portability in the dictionary is defined as ‘the ability to be easily carried or moved’. When referring to your mortgage (and often also called ‘porting’), it is simply where you are able to take your mortgage deal/rate with you when you move home.
If you are moving to a more expensive property you may need to borrow more money. This is sometimes referred to as ‘topping up’. The additional amount that you would need to borrow would usually be put on a different deal, with a different rate, leaving you with (at least) two ‘parts’ to your mortgage. The additional borrowing part could well be more expensive since your LTV is likely to be higher.
If you move your mortgage deal to a cheaper property you will still have to meet the same product terms, in particular your new loan-to-value must not exceed your current one. This means you would be unlikely to be able to take the full amount of your mortgage with you when you move.
If you do borrow less on the deal you're taking than the amount you owe on your current mortgage early repayment charges may apply on the amount not being ported.
If you had a mortgage for around £150,000, your property is worth £200,000 and you decided to downsize to a home worth £150,000, you will have to reduce your mortgage amount to move it to the new property. The amount you sell your current home for will determine how much you need to reduce your mortgage by and how much you have available to contribute to the purchase of the new home.
Current mortgage balance: £150,000
Current property valuation: £200,000 (equity of £50,000)
New home valuation: £150,000
New mortgage: £100,000 (£150,000 current mortgage - using £50,000 equity towards the purchase)
In certain circumstances when porting your mortgage deal, you may need to pay an Early Repayment Charge (ERC). However your lender may refund any ERCs paid depending on when your new mortgage completes.
Things to remember before you decide to port your mortgage.
Check your original mortgage offer to make sure the deal you have is ‘portable’.
Think about any changes in your circumstances – you will have to reapply for the deal and may no longer be eligible.
You will still have to pay valuation fees and legal fees relevant to moving home.
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