Introduction
We helped our customers move to a new home in Farnborough, Hampshire, while keeping their existing fixed-rate mortgage with NatWest and arranging additional borrowing for the purchase.
The customers already had a mortgage on a favourable fixed interest rate. However, moving home before the end of their existing deal would have resulted in an early repayment charge of over £5,000 if they repaid the mortgage.
We arranged to port their existing mortgage deal and secure an additional £165,000 with NatWest. This allowed them to retain their existing fixed rate on the original borrowing, avoid the early repayment charge and complete their house move with a mortgage structured around their requirements.
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The Scenario
Our customers were existing homeowners looking to purchase a house in Farnborough for approximately £655,000.
They had built up equity in their existing property, which would be used towards the deposit for their next home. However, they needed to increase their overall mortgage borrowing to approximately £500,000.
Their existing mortgage was with NatWest, and the fixed-rate deal still had time remaining. The rate was considerably more favourable than the rates available on new mortgage products at the time.
Rather than lose this arrangement by repaying the mortgage and starting again, the customers wanted to explore whether they could transfer their existing deal to the new property.
This is known as mortgage porting, where a lender allows an existing mortgage product to be transferred to a new property, subject to its lending criteria and approval.
The proposed borrowing was structured as follows:
| Mortgage details | Arrangement |
| Property location | Farnborough, Hampshire |
| Purchase price | Approximately £655,000 |
| Total mortgage | Approximately £500,000 |
| Existing mortgage to port | Approximately £335,000 |
| Additional borrowing | £165,000 |
| Loan-to-value | Approximately 76% |
| Mortgage term | 30 years |
| Lender | NatWest |
Both customers were employed, with one working as a teacher and the other as a NHS nurse.
Their household income consisted of basic salaries alongside regular overtime earnings, which needed to be considered when assessing affordability for the increased mortgage borrowing.
They also had existing financial commitments that needed to be factored into the lender’s affordability assessment.
They also had existing financial commitments that needed to be considered when assessing affordability.
The Challenge
The issue was retaining the customers’ existing mortgage deal while increasing their borrowing sufficiently to purchase the new property.
There were several important considerations.
Avoiding an Early Repayment Charge
The customers’ existing NatWest mortgage was still within its fixed-rate period.
Repaying the mortgage early would have triggered an early repayment charge of approximately £5,156.
This was a significant cost that could otherwise reduce the equity available for their next purchase.
Porting the existing mortgage product offered a way to retain the favourable rate while avoiding this charge, provided NatWest agreed to the new mortgage arrangements.
Arranging Additional Borrowing
Although the customers could retain their existing mortgage product through porting, they needed an additional £165,000 to complete their purchase.
This additional borrowing would be arranged as a separate mortgage sub-account with its own interest rate and fixed-rate period.
The customers preferred a two-year fixed-rate product for this additional borrowing, rather than committing to a longer fixed-rate period.
Extending the Mortgage Term
The customers also wanted to extend their overall mortgage term to 30 years to help manage their monthly mortgage payments.
This meant the proposed arrangement needed to satisfy NatWest’s requirements for mortgage porting, additional borrowing, affordability and extending the mortgage term.
All these elements had to be considered together.
What We Did
We started by reviewing the customers’ existing mortgage arrangements, including the fixed-rate terms and early repayment charge.
We also assessed the equity available from their property sale, their combined employment income and their regular household expenditure.
As part of the affordability assessment, we considered their basic salaries and regular overtime income alongside their existing financial commitments.
We then researched NatWest’s mortgage porting requirements and additional borrowing products to establish whether the existing mortgage could be retained while increasing the total borrowing.
Given the different elements involved, we contacted our NatWest Business Development Manager and the lender before submitting the application to discuss the proposed arrangements.
This allowed us to consider the lender’s requirements for the ported mortgage, the additional borrowing, the term extension and the treatment of product fees.
We also gathered the supporting evidence needed for the application, including payslips, overtime evidence, bank statements, the existing mortgage statement and confirmation of the equity available from the property sale.
With the relevant requirements established, we structured the mortgage application to retain the existing fixed-rate deal and arrange the additional borrowing under a separate sub-account.
The Solution
We recommended retaining NatWest as the mortgage lender and porting the customers’ existing fixed-rate mortgage to their new property.
The original mortgage balance of approximately £335,000 was retained on its existing product terms, while the additional £165,000 was arranged on a separate two-year fixed-rate product.
The overall mortgage was structured over a 30-year repayment term, with the relevant product fees added to the borrowing.
This arrangement allowed the customers to benefit from the lower rate on their existing mortgage rather than replacing the entire borrowing with a new mortgage product.
It also meant the additional borrowing could be reviewed separately when its initial two-year fixed-rate period ended.
Why This Solution Worked
NatWest was suitable because it could accommodate the combination of mortgage porting, additional borrowing and the requested term extension.
The lender’s porting arrangements allowed the customers to retain their existing fixed-rate product without incurring the early repayment charge.
At the same time, NatWest could provide the additional £165,000 needed for the purchase through a separate mortgage sub-account.
Extending the mortgage term to 30 years also helped structure the repayments around the customers’ household budget.
Importantly, the recommendation considered the overall mortgage arrangement rather than looking solely at the interest rate on the additional borrowing.
The Result
Our customers successfully completed their house move to Farnborough with their mortgage arrangements in place.
The completed arrangement allowed them to:
- Retain their existing NatWest fixed-rate mortgage product.
- Avoid an early repayment charge of over £5,000.
- Secure the additional £165,000 required for their purchase.
- Extend the overall mortgage term to 30 years.
- Arrange a two-year fixed-rate product for the additional borrowing.
The customers were also existing Kerr & Watson customers, and the arrangement provided an opportunity for us to continue supporting them with future mortgage product reviews.
What This Case Shows
Moving home does not necessarily mean giving up an existing fixed-rate mortgage deal.
Where a mortgage is portable, it may be possible to retain the existing product when purchasing another property, even if additional borrowing is required.
However, porting is subject to the lender’s approval, and the full mortgage arrangement must be considered. This includes affordability, the new property’s suitability, additional borrowing rates and any applicable early repayment charges.
In this case, retaining the existing mortgage with NatWest helped our customers avoid a significant charge while securing the additional funds needed for their move.
Moving Home and Considering Mortgage Porting?
If you’re planning to move home but still have time remaining on your fixed-rate mortgage, it’s worth reviewing your options before deciding to repay your existing mortgage.
At Kerr & Watson, we provide independent, whole-of-market mortgage advice, including reviewing whether porting your existing mortgage or moving to another lender would be more suitable for your circumstances.
If you are buying in Farnborough or elsewhere, contact Kerr & Watson to discuss your mortgage options.
