Moving Home Mortgage
Whether you’re running out of room, thinking of downsizing or moving to a new area; sorting your moving home mortgage is one of the most important things you need to sort out when looking to take the next step on the property ladder. You have many different options available to you, and there isn’t a ‘one-size-fits-all’ best solution that suits everyone.
What are some of the moving home mortgage options available to you?
- Porting your mortgage
Depending on a few key factors, it is possible to transfer your current mortgage to a new property, in a process called porting your mortgage. This is ideal if your current mortgage deal is on favourable terms with a low interest rate. Even in situations where you have found a more favourable interest rate with lower monthly repayments, sometimes porting your mortgage will still be the most cost effective option as it can help you to avoid some of the fees associated with moving your mortgage.
Not all mortgages are portable, so it is worth checking your lender’s terms and conditions. If your current mortgage isn’t portable, then your house sale will have to pay off the existing mortgage and you will need a new mortgage for the new property.
If it is possible to port your mortgage to a new house, you will still need to reapply and jump through all of the same hoops as when you first applied. This includes passing the same affordability and credit checks, as well as paying for a valuation, legal fees and any applicable stamp duty. As you are moving house, you will not qualify for the first time buyer stamp duty exemptions.
If your financial circumstances have changed, such as a decrease in income or a change in employment status, then you might find it harder to get approved for the same mortgage.
- Applying for a home mover mortgage
If porting your mortgage isn’t for you, then you will need to pay off your existing mortgage from the sale of your existing home, and then apply for a new mortgage. The lender will carry out the standard credit and affordability checks to ensure that you can afford the new repayments.
In addition to any early repayment or exit fees from the existing mortgage, you will be charged arrangement fees for the new mortgage, as well as the other standard costs such as valuation, survey, legal fees and stamp duty.
- Borrowing more for a more expensive property
If your new property is more expensive and you will need to borrow more money for the purchase, then you have three main options:
Pay off your existing deal and apply for a new one
If you are able to use your existing home sale to pay off your existing deal, then this approach will give you the freedom to shop around for the best new deal. This could be the right option for you if mortgage rates have fallen significantly since you secured your current deal, however you will have to factor in early repayment / exit fees and the costs associated with arranging a new deal.
Port and increase your existing mortgage
Your existing lender might agree to loan you more money to cover the extra property price. This leaves you with just one repayment to make each month, and can save on any early exit fees as well as arrangement fees for a new mortgage. However, you won’t necessarily get the best interest rates.
Port your existing mortgage and take out an additional loan / mortgage
Whilst you may end up with two mortgages, your lender might require you to take out a separate loan to cover the difference in property price. This could result in you having to stump up another mortgage arrangement fee, whilst not necessarily securing the best interest rate.
Some people incorrectly believe that if they are not borrowing more money, then they do not need to go through the lender’s affordability and credit checks. This is incorrect. Even if the amount borrowed stays the same or actually decreases, you will still need to pass all of the financial checks again. Your financial situation may have changed since you first applied, so it should not be taken for granted that just because you have previously been eligible, you still will be.
Can you move house without changing your mortgage?
Often, you can move house without changing your mortgage, as long as your mortgage is portable. The lender will still carry out their standard credit and affordability checks, as well as running a valuation of the new property.
The process is typically more straightforward if the new home is of a similar value to your existing property, but if the property value is higher then as long as you pass the affordability and credit checks, most lenders will allow you to borrow more.
Even though you might be able to continue with your same mortgage, it is still highly recommended that you speak to an advisor to ensure that this is the best course of action for you and your property.
What costs should you budget for when taking out a Moving Home Mortgage?
If you aren’t porting your existing mortgage, these are the typical extra fees that you should factor in to your budgeting:
Frequently Asked Questions
- Can you use the equity in your current house as a deposit when moving home?
If either your property has risen in value or you have paid off a sizable chunk of the mortgage, you might have built up positive equity in your property. This money can be used towards a deposit for a new property, or it would be yours should you sell the house and settle the mortgage, subject to any fees.
- What happens if you move to a cheaper property with a smaller mortgage?
If you are looking to downsize for whatever reason, if your financial situation has remained the same then you should be able to take out a smaller mortgage with lower monthly repayments or a shorter repayment period. If you own a significant proportion of your property, then using the equity you might be able to secure the new less expensive property mortgage free.
- Can I still move if I am in negative equity on my home?
Whilst moving is still possible whilst in negative equity, it is highly recommended that you seek independent, impartial advice before moving forward with any home purchasing plans. The negative equity will make it harder to get accepted for a new mortgage, with certain restrictions on the type of property that you can buy.
Start your Moving Home Mortgage process with us
As we are not tied to any specific lender, we can make sure that we help you to select the right mortgage for you and your property. Call us for an initial, free of charge consultation. There is no obligation to use our services and you can meet in one of our offices in Horsham and Southwater, or arrange a phone based appointment.
YOUR HOME MAY BE REPOSSESSED IF YOU DON’T KEEP UP REPAYMENTS ON YOUR MORTGAGE OR OTHER DEBT SECURED ON IT
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