Can You Move Home While in a Fixed-Term Mortgage?
Can You Move Home While in a Fixed-Term Mortgage?
Many homeowners assume that being in the middle of a fixed-term mortgage means they’re locked into staying in their home until the term ends. However, that’s not the case! If you're in a fixed-rate mortgage but are thinking about moving home, you may be surprised to learn that you can still do so. The key to making this move smoothly is the option of mortgage porting.
What is Mortgage Porting?
Mortgage porting allows you to transfer your existing mortgage deal (the terms and interest rate) to a new property. This can be particularly useful if you’re happy with your current deal but need to move home before the fixed term is over.
When you port your mortgage, you are essentially taking the mortgage with you and applying it to your new property, which means that you don’t have to pay any early repayment charges (ERCs) that would normally apply if you were to break your fixed-term agreement. This can be an excellent option for those who want to avoid hefty fees and keep the same deal on a new home.
Can You Top-Up Your Mortgage When Porting?
If your new property costs more than your current home, you can often top-up your mortgage to cover the additional costs. This means you can borrow extra money on top of the balance of your existing mortgage, which will then be subject to the lender’s current interest rates.
A mortgage top-up works well if you are looking to buy a larger home or move to an area with higher property prices, and it allows you to keep the terms of your original mortgage for the portion you’re porting over. The extra borrowing would typically be added to your mortgage as a separate loan, which might be at a different rate.
Why Should You Consider Porting Your Mortgage?
Avoid Early Repayment Charges: One of the most common reasons for considering porting is to avoid the early repayment charges that typically apply when you break a fixed-term mortgage early. These charges can be significant, sometimes as high as 5% of the loan balance.
Keep Your Competitive Rate: If you're happy with your current mortgage rate, porting allows you to keep it, saving you from needing to find a new deal that might come with higher rates. If mortgage rates have risen since you took out your original mortgage, porting could be particularly beneficial.
Flexibility to Move: Porting provides flexibility to move home without losing your mortgage deal, so you're not stuck in your current property just because you’re on a fixed-term deal. It’s a great option for those who need more space or want to relocate but don't want to give up their favourable mortgage rate.
Key Things to Know About Porting a Mortgage
Eligibility: Not all mortgages are portable. You’ll need to check with your lender to see if your current mortgage is eligible for porting. Additionally, you’ll need to meet the lender’s criteria for the new property.
Mortgage Top-Up Approval: If you're looking to top up your mortgage, you’ll need to get approval for the extra borrowing. This is subject to affordability checks, and the lender will review your financial situation to ensure you can manage the higher loan amount.
Property Valuations and Fees: Your lender may require a valuation of the new property, and you may need to pay associated fees. If the new property is worth significantly more than your current one, the lender may also require a larger deposit or a different loan-to-value (LTV) ratio.
Timing: The process of porting your mortgage can take some time, as the lender will need to assess the new property and complete the necessary paperwork. It’s crucial to factor this in when planning your move to ensure everything is in place before you exchange contracts.
What If You Don’t Want to Port?
If porting doesn’t seem like the right option for you, or if your current deal isn’t portable, you can always consider remortgaging when you move. This would mean paying off your existing mortgage and taking out a new one, potentially at a new rate or with different terms. This could be an option if you want to change lenders or if your financial situation has changed since you took out the original mortgage.
Final Thoughts
Moving home while in a fixed-term mortgage may seem daunting, but porting your mortgage can make the process much smoother and cost-effective. Whether you want to keep your existing deal or need to top-up for a bigger property, mortgage porting offers flexibility and avoids hefty early repayment charges. Always check with your lender to see if your current deal can be ported, and work with a mortgage advisor to ensure you're getting the best deal for your next home.
If you’re unsure about your mortgage options when moving, it’s always a good idea to speak to a professional, like a mortgage broker, who can guide you through the process and help you make the right decision.