How Does Mortgage Porting Work When You Move Home?

Mortgage porting offers homeowners a path to transfer their existing home loan terms from one property to another when relocating. This allows individuals to retain favorable elements of their current mortgage, such as the interest rate and remaining term, for a new residence. It presents an alternative to securing an entirely new mortgage, which would typically involve closing out the old loan and originating a fresh one. While not universally available for all mortgage products or lenders in the United States, porting aims to provide a more seamless financial transition during a move.

Core Concepts of Mortgage Porting

Mortgage porting involves transferring the contractual terms of an existing mortgage deal to a new property. This means the interest rate, features, and remaining term of the original loan can be applied to the new home. This is not a literal transfer of the loan itself, but rather the application for a new mortgage with the new property as collateral, which incorporates the terms of the previous agreement. Lenders re-qualify the borrower and the new property under current lending criteria, while honoring the past loan’s conditions for the ported amount.

Three primary scenarios exist when porting a mortgage. A “like-for-like” port occurs when the borrower needs to borrow the same amount for the new property as was outstanding on the previous mortgage, maintaining existing terms without additional borrowing. If a more expensive property is being purchased, a “port and top-up” scenario arises, where the original mortgage amount is ported, and an additional loan amount is secured for the difference. This additional amount may be subject to a different, potentially higher, interest rate, or a blended rate might be calculated across the total new loan. Conversely, a “port and reduce” occurs when moving to a less expensive property, potentially leading to early repayment charges on the portion of the original loan that is no longer needed.

Assessing Your Current Mortgage and New Property

Before initiating a mortgage port, homeowners should review their current mortgage and evaluate their prospective new property. The first step involves checking the existing mortgage contract for a “portability clause” or contacting the current lender to confirm if porting is an option. Not all mortgages are portable, and some, like certain variable-rate mortgages, may not qualify. Understanding the remaining term of the mortgage and any potential early repayment charges is also important, particularly if a “port and reduce” scenario might incur penalties on the unported amount.

Lenders have specific requirements that must be met to approve a porting request. A consistent history of on-time mortgage payments on the current loan is expected. The new property must also meet the lender’s criteria, including a professional appraisal to ensure its value and type are acceptable collateral for the loan.

Borrowers also undergo a comprehensive personal financial assessment, similar to applying for a new mortgage. This includes re-evaluating income, credit score, and debt-to-income ratio. A decline in income, a lower credit score, or an increased debt-to-income ratio since the original mortgage was secured could affect eligibility for porting, as the lender must confirm the borrower’s continued affordability for the new loan.

The Application and Underwriting Process

Once initial assessments confirm the potential for mortgage porting, the formal application process begins with the existing lender. Contacting the current mortgage provider is the first step to receive guidance on their porting procedures.

Submitting the application for a ported mortgage involves providing financial and property-related documents. These include proof of income, such as recent pay stubs or tax returns, bank statements, and detailed information about the new property being purchased. The lender uses these documents to conduct a fresh assessment of the borrower’s financial situation and the new property’s suitability.

The underwriting process for a ported mortgage is essentially a new loan application for the new property, even though the terms of the original mortgage are being carried over. The lender evaluates the borrower’s financial health and the new property against their current lending criteria, not necessarily the criteria that applied when the original mortgage was granted. If the application meets all criteria, the lender will issue a conditional approval for the ported mortgage. This approval signifies that the lender is prepared to proceed, contingent upon meeting any remaining conditions, such as a satisfactory property appraisal or final verification of financial details.

Adjustments and Finalizing the New Mortgage

Upon approval of the ported mortgage, various financial adjustments and final steps are undertaken to complete the transaction. For the portion of the loan that is ported, the original interest rate and terms are retained. Any “top-up” amount, the additional money borrowed for a more expensive new property, will be subject to the lender’s current interest rates. This can result in two distinct parts to the mortgage, each with a different rate, or the lender might offer a “blended rate” that averages the original and new rates across the total loan amount.

Loan amount changes are handled distinctly. If the new property requires a larger loan, additional funds are incorporated. If moving to a less expensive property and reducing the loan amount, early repayment charges might apply to the unported portion of the original loan, depending on the mortgage terms.

Associated fees are a consideration in the porting process. Borrowers may incur new valuation fees for the appraisal of the new property, as well as legal fees related to the new mortgage documentation and property transfer. Some lenders may also charge specific administrative or porting fees. The final steps involve signing new mortgage documents for the new property, which legally secures the loan against the new asset. Coordination with the sale of the old property is also important, as lenders require the sale of the current home and the purchase of the new one to occur within a specific timeframe, typically 30 to 120 days, to facilitate the porting process.