PORTING YOUR MORTGAGE: WHAT THIS MEANS FOR YOUR PROPERTY SALE
Introduction
Your mortgage is a key consideration when selling a property and buying another at the same time. If you are doing both, you may have been advised by your broker or lender about “porting” your mortgage.
This guide explains what porting a mortgage means from a conveyancing perspective and how it may affect your sale and purchase with MJP.
What does it mean to “port” your mortgage?
Porting a mortgage means transferring your existing mortgage product (including its interest rate and remaining fixed or discounted period) from your current property to your new one, subject to your lender’s approval.
Clients commonly choose to port their mortgage in order to:
avoid paying an Early Repayment Charge (ERC); and/or
retain a favourable interest rate that is no longer available on the market.
If you are porting your mortgage, please let us know as early as possible. That said, if you have not mentioned this at the outset, do not worry — it is something we will usually identify during the transaction.
Why do we still need a Redemption Statement?
Even if you are porting your mortgage, your existing mortgage must still be redeemed in full when your current property is sold. This often comes as a surprise, as many clients assume the mortgage balance simply transfers from one property to the next.
In practice, the mortgage cannot be transferred directly. This is because your lender has registered a legal charge against the title of your current property. That charge must be removed on completion of the sale, which can only be done by redeeming the mortgage in full using sale proceeds.
A Redemption Statement confirms:
the outstanding mortgage balance; and
whether an Early Repayment Charge is included.
Once we receive the Redemption Statement, we will review it and, if an ERC is shown, we will confirm with you whether you intend to port the mortgage or pay the charge.
Early Repayment Charge (ERC)
What is an Early Repayment Charge?
An Early Repayment Charge is a fee charged by your lender if your mortgage is repaid before the end of a fixed-rate or other incentive period. It is designed to compensate the lender for interest they expected to receive over the remainder of that period.
Why does the ERC appear on my Redemption Statement?
When your property is sold, the mortgage must be redeemed on completion. If this redemption occurs before the end of your fixed-rate or incentive period, the lender will usually include the ERC on the Redemption Statement — even if you intend to port the mortgage.
This is standard practice and does not necessarily mean the ERC will ultimately be payable.
What the ERC means for us at MJP
On exchange of contracts, MJP is obliged to give a formal legal undertaking to the buyer’s solicitors confirming that the mortgage charge registered against the property will be redeemed on completion.
To safely provide this undertaking, we must have clear written confirmation from your lender that the mortgage can be redeemed without an Early Repayment Charge because the mortgage is being ported. This confirmation is commonly referred to as an ERC waiver.
ERCs can vary significantly, from a few hundred pounds to many thousands — depending on your mortgage terms. Due to the potential financial impact, we must receive the lender’s written waiver before exchange of contracts.
Until the waiver is received:
The Finance section of your sale file will continue to show the full redemption figure, including the ERC.
We cannot proceed to exchange contracts, as doing so could expose you to an unexpected and potentially substantial charge if the ERC later proves to be payable.
Please also be aware that some lenders issue date-specific ERC waivers. This means that once a completion date is agreed, an updated or revised waiver may be required.
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