Intelligent Finance Portable Mortgage

Intelligent Finance (IF) offered a groundbreaking product in the UK mortgage market: the portable mortgage. While IF no longer offers new mortgages, the concept of portability remains relevant and understanding it is beneficial for homeowners.

A portable mortgage allows you to transfer your existing mortgage – including its interest rate and terms – to a new property when you move. This contrasts sharply with traditional mortgages, which require you to pay off the existing loan and secure a new one whenever you relocate.

The primary advantage of a portable mortgage, especially like those once offered by Intelligent Finance, lay in preserving favorable terms. Imagine securing a low fixed interest rate during a period of economic downturn. If interest rates subsequently rise, being able to move that mortgage to a new property without refinancing at a higher rate represents significant savings. This was a key selling point for IF’s product.

Beyond the interest rate, other terms could also be advantageous to retain. This includes features like overpayment allowances, offset facilities (where savings reduce the mortgage balance on which interest is calculated), or specific repayment structures. Securing a new mortgage with these features may be more expensive or even unavailable in the current market.

However, portability isn’t automatic. The lender, in this case previously Intelligent Finance (under Lloyds Banking Group), would still assess your eligibility for the mortgage on the new property. This includes affordability checks, verifying your income, and evaluating the new property’s value. If the new property is significantly more expensive, you may need to borrow additional funds on top of your portable mortgage. This extra borrowing would likely be at the prevailing interest rates, creating a blended rate across the whole loan.

Conversely, if the new property is cheaper, you’d likely have to reduce the mortgage amount to reflect the purchase price. This might involve paying off part of the original mortgage, which could incur early repayment charges if your mortgage terms stipulated them. The lender’s terms and conditions surrounding down payments and the minimum mortgage size also applied.

Furthermore, there were often time limits associated with portability. For example, you might have a certain number of months from selling your old property to purchase a new one and activate the portability feature. Failing to meet this deadline would result in losing the benefit of the portable mortgage.

While Intelligent Finance’s specific portable mortgage is no longer available, the underlying principle of mortgage portability is something to consider. Some lenders still offer similar features, and understanding the potential benefits and limitations is crucial when choosing a mortgage product. It’s essential to carefully review the fine print and assess whether the portability feature aligns with your future housing plans before committing to a specific mortgage. Consult with a mortgage advisor to explore all available options and ensure the chosen mortgage suits your individual circumstances.