Can you move house during a fixed-rate mortgage?
Yes, you can move house while you are still within a fixed-rate mortgage period.
You will normally need to decide whether to port your existing mortgage deal to the new property or repay your current mortgage and arrange a new mortgage, potentially with another lender.
If you leave your existing fixed-rate deal early, an early repayment charge (ERC) may apply. Porting can sometimes allow you to retain your existing rate and avoid some or all of the ERC, but this is subject to your lender’s porting rules, a new affordability assessment and the new property meeting its criteria.
Worried About Moving While You Are Still on a Fixed Rate?
Many homeowners worry that being within a fixed-rate period means they cannot move without paying a large early repayment charge. In reality, you may have several options, including porting your existing mortgage or comparing the cost of taking a new mortgage.
At Kerr & Watson, we can review your current mortgage, any early repayment charges and the amount you need for your new property before comparing your options.
Your options when moving during a fixed-rate mortgage
When moving home, you typically have two main options:
- Port your mortgage to your new property
- Repay your mortgage and take out a new deal
Each option has different costs, flexibility, and risks.
Porting is not automatically cheaper and taking a new mortgage is not automatically better. The comparison should take account of the early repayment charge, mortgage rates, product fees and the cost of the mortgage over the period being compared.
| Port your existing mortgage | Take a new mortgage | |
|---|---|---|
| Existing fixed rate | You may be able to keep it | Usually repaid and replaced |
| Early repayment charge | May be avoided or refunded, subject to lender rules | May normally be payable if you leave during the ERC period |
| New affordability assessment | Yes | Yes |
| New property must meet lender criteria | Yes | Yes |
| Borrowing more | Usually taken on a separate product/rate with the existing lender | Included within the new mortgage |
| Access to other lenders | No, the port remains with your existing lender | Yes |
| Best option depends on | Existing rate, ERC, lender criteria and additional borrowing | ERC, new rates, fees, affordability and lender criteria |
Option 1: Porting Your Fixed-Rate Mortgage
Porting means taking your existing mortgage product or rate with you when you move to a new property, subject to your lender’s rules.
It does not mean that your mortgage simply changes address automatically. You will normally need to make a new mortgage application with your existing lender and the new property will also need to be acceptable to them.
How porting a mortgage works
Porting is not automatic. You will normally need to:
- Reapply with your existing lender
- Pass its affordability assessment
- Meet the lender’s criteria for the new property
- Have a mortgage product that is portable
- Meet the lender’s rules for the amount you want to port
Even if your original mortgage was affordable when you first took it out, your lender will normally reassess your circumstances when you move. Changes to income, commitments, employment, age or the amount you need to borrow can therefore affect whether the port is approved.
What happens if I need to borrow more when porting my mortgage?
If your new property is more expensive and you need a larger mortgage, your existing lender may allow you to port your current balance and borrow the additional amount on one of its current mortgage products.
The additional borrowing will often sit as a separate part or sub-account of the mortgage and may have a different interest rate, product end date and early repayment charge period from the amount you have ported.
This can mean your mortgage has two or more parts with different rates and end dates, which is worth considering when planning future remortgages or product transfers.
Any additional borrowing will also be subject to the lender’s affordability and lending criteria.
What if I need a smaller mortgage when I move?
If you are moving to a cheaper property or using more equity and therefore need a smaller mortgage, you may not be able to port the whole of your existing balance.
Where part of the mortgage is repaid while it is still within an early repayment charge period, an ERC may apply to the amount that is not being ported, subject to your lender’s terms and any available overpayment allowance.
This is why moving to a cheaper property does not always mean that porting will be completely free of early repayment charges.
What if my sale and purchase do not complete on the same day?
Ideally, the sale of your existing property and purchase of your new home may complete on the same day. However, this is not always possible.
If your current mortgage is repaid when your existing property is sold but your new purchase completes later, this is sometimes referred to as non-simultaneous porting.
Depending on your lender’s rules, you may initially have to pay the early repayment charge when your existing mortgage is redeemed. Some lenders can then refund some or all of the charge if you complete on the new mortgage within their permitted porting period and meet the relevant conditions.
The time allowed and the conditions for receiving an ERC refund vary between lenders, so this should be checked before you sell your existing property.
If you know there may be a gap between your sale and purchase, speak to your mortgage adviser early so the lender’s porting and ERC-refund rules can be confirmed.
Advantages of porting
- You may be able to retain an existing fixed rate that is competitive.
- You may avoid some or all of the ERC, subject to the lender’s rules.
- It can avoid replacing your whole mortgage with a new rate if only additional borrowing is required.
Things to consider
- Porting still requires a new mortgage application.
- Your income and affordability will normally be reassessed.
- The new property must meet your existing lender’s criteria.
- Additional borrowing may be on a different rate and product end date.
- If you borrow less, part of your existing mortgage may still incur an ERC.
- Remaining with your existing lender may not be the lowest-cost option overall.
When might porting not be possible?
Porting may not be possible if:
- Your existing mortgage product is not portable
- You no longer meet the lender’s affordability or lending criteria
- The new property is unacceptable to the lender
- The lender will not agree the amount you need to borrow
- Your circumstances have materially changed
- The proposed ownership or mortgage structure does not meet the lender’s requirements
Even where porting is possible, it may not necessarily be the most cost-effective option once the mortgage rate, additional borrowing, fees and any ERC are compared.
Option 2: Taking Out a New Mortgage
Instead of porting, you can repay your existing mortgage when you sell and arrange a new mortgage for the property you are buying.
This allows you to consider other lenders and mortgage products, but an early repayment charge may be payable if your current mortgage is still within its ERC period.
The important comparison is therefore not just the new interest rate. You should consider the ERC, product fees, valuation or legal costs where applicable and the overall cost of each option.
How much could the early repayment charge be?
The amount of any early repayment charge depends on your existing mortgage product and when you repay it.
The charge may be calculated as a percentage of the amount being repaid, and some mortgage products reduce the percentage during the fixed-rate period.
Your mortgage offer or latest mortgage statement should explain the ERC that applies. Your lender can also provide a redemption statement showing the amount required to repay the mortgage on a particular date.
Find out Your Options
Is it cheaper to port your mortgage or take a new one?
It depends on the mortgage you already have and the alternatives available when you move.
Porting may be attractive if your existing fixed rate is competitive and doing so avoids a significant early repayment charge.
However, taking a new mortgage could still be more cost-effective where another lender offers a better overall deal, particularly if the ERC is small or you are close to the end of the fixed-rate period.
The comparison should include:
- Any early repayment charge
- The interest rate on your existing mortgage
- The rate available on additional borrowing
- Alternative mortgage rates
- Product and other mortgage fees
- The amount being borrowed
- The period over which you are comparing the costs
Looking only at the headline interest rate can therefore give a misleading result.
Example: porting when you need to borrow more
Imagine you have £200,000 remaining on a fixed-rate mortgage and you want to move to a property where you need a total mortgage of £275,000.
If your lender approves the port, the existing £200,000 may remain on your current mortgage product, while the additional £75,000 could be arranged on one of the lender’s current products.
You could therefore end up with:
£200,000 — existing fixed rate and existing product end date
£75,000 — new rate and a different product end date
This can avoid replacing the whole mortgage immediately, but it also means the two parts may finish at different times.
Whether this is preferable to taking an entirely new mortgage would depend on the rates, ERCs, fees and affordability at the time.
Can I sell my house during a fixed-rate mortgage?
Yes. A fixed-rate mortgage does not prevent you from selling your home.
When the property is sold, the mortgage secured against it will normally need to be repaid on completion. If you are still within an early repayment charge period, an ERC may be due unless you are able to port the mortgage under your lender’s rules.
If you are buying another property, it is therefore worth checking your porting options and potential ERC before committing to the move.
What happens if the two parts of my mortgage have different fixed-rate end dates?
If you port an existing mortgage and take additional borrowing, the two parts may have different product end dates.
This can make future mortgage planning slightly more complicated. When one fixed rate ends, the other part may still be subject to an early repayment charge.
Depending on your lender and circumstances, you may decide to align the product end dates where suitable, switch one part when it becomes available, or wait until both can be reviewed together.
This is worth considering when choosing the product for any additional borrowing rather than looking only at its initial monthly payment.
Should you port your mortgage or switch?
The right option depends on your situation.
Porting may be worth considering if:
- Your existing rate is attractive
- The ERC for leaving is significant
- Your current lender can provide the borrowing you need
- The new property meets its criteria
A new mortgage may be worth considering if:
- Your existing lender cannot provide enough borrowing
- The new property does not meet its criteria
- Other lenders provide a lower overall cost after allowing for the ERC and fees
- Your circumstances are better suited to another lender
The right answer depends on the total cost and whether you meet the relevant lender’s criteria.
Frequently Asked Questions About Moving During a Fixed-Rate Mortgage
Can I port my mortgage to a cheaper property?
Potentially. However, if you need to borrow less and therefore port only part of your existing mortgage, an early repayment charge may apply to the amount being repaid, depending on your lender’s terms.
Are all fixed-rate mortgages portable?
No. Portability depends on the terms of your mortgage product. Check your mortgage offer or ask your lender or mortgage adviser before assuming the product can be moved.
Do I have to stay with the same lender when I move?
No. You can consider a new lender when moving home. However, if you repay your existing fixed-rate mortgage early, an ERC may apply, so the cost of switching should be compared with porting.
Can my lender refuse to let me port my mortgage?
Yes. Porting is normally subject to a new mortgage application. Your lender can decline the application if you no longer meet its criteria or the new property is unacceptable.
Conclusion
You can move house while you are still within a fixed-rate mortgage period.
The main options are usually to port your existing mortgage product to the new property or repay it and arrange a new mortgage. Which is more suitable will depend on your current rate, any early repayment charges, how much you need to borrow, your lender’s criteria and the alternatives available across the market.
Porting is not automatic and you will normally need to complete a new mortgage application. If your sale and purchase complete on different dates, it is also important to check your lender’s rules on non-simultaneous porting and any potential ERC refund.
Need help moving during a fixed-rate mortgage?
Moving while you are still within a fixed-rate period can involve several options, particularly if your mortgage is portable or an early repayment charge applies.
At Kerr & Watson, we can review your existing mortgage, the amount you need for your new property and the cost of porting compared with arranging a new mortgage.
