Mortgage porting for buy to let products works very similarly to a mortgage port process around a residential property loan.
The concept is that you apply for a different buy to let mortgage product but stick with the same lender.
When the new application is approved, the lender may agree to transfer the rates and conditions you’re paying now over to a new property.
Porting is very much dependent on your lender, and interest-only buy to let broker are more complex since it’s less easy to demonstrate affordability based on the projected rental income.
However, if you can prove that the repayment strategy is robust, you can potentially port a buy to let interest-only mortgage, provided you pass all the required credit checks.
Porting a Mortgage: The Basics
Porting is a straightforward concept, but a lot depends on how your lender perceives your application and whether they’re open to porting requests.
The new application is dealt with as any other buy to let application, so the lender will review your income, debts, credit rating, and the value and nature of the new property before they commit to making an offer.
We tend to recommend using a mortgage advisors since the application can become complex, so professional guidance can make things more streamlined.
Porting Buy to Let Mortgages to Higher Value Properties
If you want to carry over your terms and rates but borrow against a more expensive rental asset, you may need to provide a cash payment to cover the financial difference.
Porting while borrowing more than your original loan means that, in effect, anything above your existing debt is charged at the rates applicable to a new mortgage product, often linked to the available rates the lender is offering at that point in time.
Landlords using a mortgage port that contributes an extra cash deposit for the difference in property values will usually get a much better deal.
The additional down payment reduces the Loan to Value ratio and mitigates the lender’s risk, making the deal more attractive from a lender perspective.
Using a Buy to Let Mortgage Port for a Lower Value Property
In contrast, if you’re keen to retain your mortgage product rates and terms but want to invest in a less expensive buy to let property, you might find the application runs a bit smoother and completes quicker.
Applicants still need to process through the application and assessment process – the rules may have become much quicker than last time you took out a mortgage, depending on the term of the existing loan.
Where you want to port a mortgage agreement to a lower value, the lender could still reuse it if they’re not satisfied their position is suitably protected.
Buy to Let Mortgage Porting Example
Let’s say we have a mortgage against a £200,000 property with a 25% deposit and £150,000 borrowed at a 75% LTV.
If you’d like to port the loan to a property and need £175,000 in funding, you’re immediately boosting your LTV to a much higher 85%.
Lenders will consider that an issue and tend to approve a mortgage porting request only if the LTV is maintained or reduced.
You’d need to cut back your mortgage application or repay more of the existing balance to reduce that risk exposure in this scenario.
Mortgage Porting With an Adverse Credit History
Mortgage lenders usually view borrowers with a bad credit score as a higher risk. If they don’t turn the application down, they’ll often ask for a higher deposit level.
That isn’t a foregone conclusion since lenders might decide that, with debt already in place, a mortgage simply switched to a new property doesn’t mean they accept substantially higher exposure.
If you’ve had a mortgage port declined due to a poor credit rating, you can either postpone your application while you work on repairing your credit score or contact the Revolution team to hear from independent lenders.
Why Can’t I Port a But to Let Mortgage Without a Broker?
Lenders may be open to mortgage porting requests, but many won’t liaise directly with customers and use broker intermediaries.
In this situation, your lender could be happy to port, but you’ll have to contact an established broker before moving into the next step.
The key is to keep the LTV consistent, so you aren’t asking a lender to let you switch a product onto a different acquisition while extending their risk without it being the same as a brand new application.
The buy to let lender may decide that you aren’t eligible for the loan on the new property and will run through the standard qualification criteria, so it’s vital to seek independent advice before you push ahead with a mortgage porting application.