Three Things You Need To Know About Porting Mortgage
Some people dream of getting a house of their own. Fortunately, you can now loan a house payable for several years. If you manage to secure a mortgage, but due to some unforeseen events, you need to move – will porting mortgage come in handy?
Paying the mortgage of a particular house should never make you feel trapped. There are some ways that you can opt for a portable mortgage so that you can transfer to a new place that you want. Here are three things you need to know about porting a mortgage that will help you live in a place that you truly desire.
Porting a mortgage is a process that will allow you to leave your current home for another one. This will allow you to transfer your existing mortgage to the new property that you’re eyeing. This kind of loan is portable, but this does not apply to all types. A portable mortgage permits the borrower to transfer the mortgage balance to a new property with the same lender and without penalties.
According to studies, about two-thirds of borrowers have no idea what porting a mortgage is, while one out of five has heard of it, but they tend not to go for it due to the lack of knowledge or information.
In hindsight, porting a mortgage means you’re taking the same mortgage deal with you to a different property – with the same lender, interest rate, loan amount, and rules. It basically means that the existing or present mortgage is repaid after selling the current property.
The loan will then resume on your new property. As you only transfer the deal, you have to pay the same amount and interest while carrying the same terms and conditions.
2.The Best Time to Port Your Mortgage
Yorkshire Building Society senior mortgage manager Chris Irvin revealed porting a mortgage could help the borrower save money if they have a loan with early repayment charges or exit fees. This will work if their new property is cheaper than the one they currently have. The best time for the loaner to take advantage of porting a mortgage is if they are still in their early mortgage period.
If a borrower has a clean deal with their current lender or has an incredibly low rate, porting a mortgage is an excellent opportunity for them as well. If they are holding one of the lowest rates available on the market, putting their mortgage loan to a new property can be advantageous and can even save them a lot of money.
3. When Should You Never Port a Mortgage?
If you plan to port your mortgage to save money, but you’re aiming for a more expensive property than what you currently have, you may end up shelling out more money. You will also have a hard time transferring the mortgage if you don’t research it thoroughly.
If you want to buy a more expensive property, you need to borrow more money. You also have to pass affordability checks conducted by the lender, as they have to make sure you are capable of paying your loans on time. Chances are, you will end up paying a higher interest rate plus the amount you are going to loan.
To make sure you still have the best deal in the market, you should compare your current rates to others. If you see a lower interest rate, it may be the right time to find a new lender and cancel porting your mortgage, as you also have to deal with exit and valuation charges and other fees.
Based on Materials from Miss Penny Stocks
Photo Sources: Citywidehomeloans, WRX property, Robyn moser, Pixabay