Portable Mortgages and Mortgage Portability explained and available solutions!
Mortgage Portability and Portable Mortgages are terms used to denote that your mortgage borrowings are transferable without penalty if you move home.
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Here we explain how Portable Mortgages work and take a closer look at mortgage portability, and provide information as to how we may be able to help arrange a Portable Mortgage for you!
Table of Contents:
What are Portable Mortgages?
Portability and Portable Mortgages are terms used to denote that your mortgage borrowings are transferable without penalty if you move home. This is especially important if your mortgage has a tie-in period where Early Repayment Charges would be invoked on early repayment of the mortgage. Tie-in periods (or lock-in periods as they may be referred to) usually apply where the mortgage is enjoying a fixed, capped or discount rate, or where a cashback may have been paid.
It is important to note that not all mortgage products are portable, especially in the sub-prime sector. Usually in these instances, the Early Repayment Charges have to be paid if the borrower moves or switches lender by remortgaging.
Because of flexibility and incurring potential Early Repayment Charges, it is important that you understand the implications of Portability if there is a likelihood of moving home or switching lender during any lock-in period. Whatever product you may choose as a result of our Advisor's recommendations, we will obviously ensure you are made aware of the product features. As a legal requirement, we will provide you with a Key Facts Illustration (KFI) document, as well as fully outlining why we made our recommendations in a Suitability Report.
How do Portable Mortgages work?
The workings of a portable mortgage are probably best illustrated in an example. Let's assume a borrower has taken a five year fixed rate mortgage of 5%, which incorporates Early Repayment Charges during the lock in period of those five years. If the borrower was to move home after the first year, then provided that the mortgage arrangement was portable, and the lender's underwriting terms continue to be met, then the borrower would be able to transfer his mortgage at the 5% fixed rate for the remaining four years of the initial fixed rate period.
If however, the mortgage was not portable, the Early Repayment Charges would have to be paid at the time of sale, and a new mortgage product would have to be negotiated for the borrower's new home. As a result of the mortgage not being portable, the borrower would not only have incurred Early Repayment Charges, which in themselves could have amounted to thousands of pounds, but also a preferential rate of 5% for the remaining four years. And so if interest rates had risen generally by 1%, the disadvantage would have been compounded!
It is very important that as a borrower you are aware of Early Repayment Charges, especially in instances where they extend beyond the term of the initial preferential rate period (i.e. the fixed, discounted or capped rate period). If there are no penalties after the preferential rate period (i.e. there is no "overhang"), you will be in a position to switch your mortgage without penalty at that time, and will be in a position to take advantage of whatever other preferential rates and incentives that may be available.
It is therefore extremely important that you understand the implications of both Portability and Early Repayment Charges. Our practice at Shire Direct is always to ensure these aspects are fully explained and discussed, and that our recommendations are confirmed in writing for you.
Can Shire Direct help me further with Mortgage Portability and Portable Mortgages?
Certainly!
Should you require further information, please do not hesitate to get in touch with us online, or call us FREE on 08000 282 281, our lines are open daily (including weekends), from 8am until 10pm - we'd love to hear from you!
Hopefully this guide to Mortgage Portability and Portable Mortgages has answered any initial questions you may have had - don't forget we're only ever a free telephone call or a couple of mouse clicks away and would love to hear from you and help in any way we can!
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.
Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.