Fixed-rate mortgages offer certainty and stability when it comes to your repayments and are particularly valuable at a time of rapidly rising interest rates.
If you are thinking of moving, however, you might wonder whether it’s possible to sell your property while you’re tied into a fixed-rate contract.
The simple answer is yes – you can move house even if you’re on a fixed-rate mortgage, transferring the terms of your current mortgage to a new property.
It might mean you have to pay significant additional fees, but it’s worth considering your options.
Porting a mortgage
Most mortgages can be moved, with all their existing terms and conditions, from one property to another. This is known as ‘porting’ a mortgage.
This allows you to keep your current interest rate, and the period it applies for, when moving to a new property.
Porting a mortgage benefits
One of the main benefits of porting your mortgage is it allows you to keep your current interest rate. Following rapid interest rate increases by the Bank of England (with more to come), this might be an appealing option if you still have some time left on your current fixed-rate mortgage.
You’ll also avoid paying exit fees as you’re not ending your contract. Most fixed-rate mortgage products will include an early repayment charge (ERC) that’s payable if you leave the contract before the fixed rate ends.
This can range from 1% to 5% of the outstanding loan balance, so if you still have a large portion of your mortgage left to pay, you might be met with a hefty fee.
Check your terms and conditions
Not all mortgages are portable.
That’s why it is important to check the terms and conditions of your existing mortgage to clarify whether porting your rate is possible.
If you’re not able to port your mortgage, you might need to consider your other options. In some cases, a better mortgage deal can save you money in the long term even with the ERC factored in – the key is to assess your costs in each situation and make an informed decision.
Things to consider
While porting your mortgage can save you money in interest and fees, it’s n6ot always straightforward.
- Your lender will carry out checks before making a decision. When you port your mortgage, you’ll essentially need to reapply for it, meeting affordability checks again
- You might not qualify again. If your circumstances have changed since you originally took out your mortgage, such as a drop in income, there’s no guarantee you’ll qualify for the same deal
- The new property will need a valuation. Your lender will carry out a mortgage valuation survey on the property you want to buy, to check that it meets their terms
- Buying a more expensive property can incur fees. If you’re not able to pay the difference between your current mortgage and the new property’s value, you might need to take out a higher loan – this can come with extra fees.
As experienced mortgage advisers, we’ll help you to understand the options available and find the best deal for your circumstances. Talk to us to find out more.