To make it clear from the outset, remortgaging is not the same as porting your mortgage, but the two are somewhat related. A lot of people have some idea of what remortgaging is, even if they’re unsure of the specifics. By contrast, plenty of people have heard of ‘porting a mortgage’ but aren’t quite sure what it entails at all.
People often even ask if porting a mortgage is the same as remortgaging. Remortgaging and porting your mortgage are two different things, but there is a reason for the confusion surrounding the topics. We’ve put this article together to explain remortgaging and porting, what the differences between the two are and the situations in which you might need to use them.
So, what does it mean to port a mortgage?
When porting, you’re effectively getting a new mortgage on a new property, but staying with the same lender. When remortgaging, on the other hand, you’re getting a new mortgage on a new (or the same) property but with a different lender.
How does porting a mortgage work?
Porting your mortgage is the process of transferring your mortgage from your current property to another while staying with the same lender. Most, but not all mortgages are portable, so check with your lender first.
Why would I port my mortgage?
Often, people choose to port their mortgage to a cheaper house. As your lender already has all of your details, porting is easier than remortgaging and you won’t have to go through a lot of the stress that you do when remortgaging. What’s more, your repayments probably won’t increase and you’re unlikely to incur too many additional fees when porting your mortgage. Even so, your lender’s criteria for giving out loans may have changed since you first acquired your mortgage, so you’ll still need to be checked to ensure you’re eligible to port it to another property.
Of course, it’s likely that your new home will cost exactly the same as your current one. As such, when porting you may need to pay more or less in your monthly repayments. Unfortunately, if you need a larger loan, you’ll probably have to pay a number of fees on top of your higher monthly repayments. This is why many people choose to port only when moving to a cheaper property.
Remortgaging explained
Many people are more aware of remortgaging than they are of porting. Remortgaging is the process of taking out a new mortgage with a new lender to replace your current loan. There are a myriad of reasons why you might choose to remortgage and it’s certainly worth considering if you’ve had your current mortgage for a few years.
Why would I remortgage?
If you’ve had your current mortgage for a long time, it may not be the best deal for your situation – circumstances change, as well as the needs you have from your mortgage provider. You can remortgage your current property, or you can choose a new mortgage when moving home. When you choose to remortgage, you’re choosing a completely different deal from a completely different provider, so it’s possible for you to find a better deal.
Which option should I choose?
Now that we’ve made it clear that porting and remortgaging are two different aspects of the mortgage sphere, we can look into which mortgage option is the best one for you right now. When moving home, both porting your mortgage and remortgaging have their own benefits but will suit different individuals with different needs.
When you apply to port your mortgage to a new property, there’s a possibility that you may be blocked from doing so by your current lender, if you no longer meet the loan criteria. You may also find yourself needing to borrow at a higher rate of interest, as loans change. On the other hand, you might have a great lender and be moving to a cheaper property. If that’s the case, porting is a great option for you.
Remortgaging comes with none of these potential pitfalls. Rather than being constrained by the parameters of the loans offered by your current lender, you’re able to shop around and choose a loan from a different lender entirely.
Ultimately, when you’re moving home, you should take all of your mortgage options into account and seek financial advice to work out which is best for you. The best deal may come in the form of a remortgage with a new lender, but you might already have the best mortgage for your situation and just want to port. Whatever the case may be, take your time to ensure that you are choosing the most cost-effective option.
Ensure that you’re getting the very best deal when you move house and utilise the services of a professional financial advisor. Get in touch with the IMC team today to find out what the best mortgage option could be for you.