Mortgage Lenders Are Refusing To Move Your Mortgage – Even Though The Small Print Says You Can

The Financial Ombudsman Service – a free service that can compel banks and other financial institutions to compensate consumers when they are treated unfairly has been receiving increasing numbers of complaints from mortgage customers who want to transfer their mortgages to a new property according to lovemoney.com.

Many mortgages are portable. When you sell your home and buy another, you can move your mortgage to a new property. This process is called 'porting'.

The Financial Ombudsman's annual report states that mortgage complaints as a whole are down to 7,100 in 2011 from 7,500 in 2010. And while it does not give exact figures about porting, it writes that it has seen an increase in the number of complaints from people who have had their ports refused.
The problem is that lenders reassess home owners as if they were new customers, yet they have also toughened up their lending criteria in the past few years. Hence, if you fail the new criteria, you can be turned down for the port even if you don't want to borrow any extra money and your financial circumstances have improved.

The FOS writes 'It is unusual to see mortgage contracts that allow the consumer unconditionally to “port” their mortgage as a contractual right.' It seems that lenders might not have explained this clearly enough to some aggrieved customers.

If you have recently gone self-employed, you may be rejected as more risky, even if your income has risen. While this might also have happened to you before the financial crisis, it appears more likely now, since lenders are being more conservative.

Mark Green from imove Cornwall, the UK’s first not-for-profit, community lead estate agency firm says “mortgage lenders should make it clear that the porting of the mortgage (moving your mortgage from one property to another) will only be allowed if your circumstances have not changed.  If your circumstances have changed, lenders should tell customers they will be assessed as a new customer which may mean they may not be able to port the mortgage”