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Home Mover Mortgages – Your Options
Moving home is very exciting but it can be stressful too, there is a lot of organisation involved and it takes time. Whether you are moving to a bigger home or downsizing into something a bit cosier, you will need to make sure you have the right mortgage.
You found your first mortgage so it may not seem as daunting moving to a new property yet there are a range of mortgage deals and interest rates out there to explore. It is important to make sure you are making the right choice for you and it would be worth seeking the help of a Mortgage Broker. This guide will look into some of the options you have when finding a new mortgage.
Porting
Most mortgages can be moved over to a new property, which is called porting your mortgage. You will still have to go through the process of having to apply for a mortgage and you may need to increase your mortgage in order to cover the cost of your new property.
If you need to increase the size of your mortgage most lenders will require you to take out an additional mortgage to cover the cost. This will usually incur an arrangement fee, so it is important to make sure you are making the right decision for you. Make sure that you are checking the interest fees on the new mortgage as they can be higher.
Mortgaging with your existing lender
You could take out a new mortgage altogether with your current lender, sometimes this can get you a better rate, but it can come alongside fees. To leave your current mortgage outside of a deal period ending you will usually have to pay an early repayment charge which can be in between 1% and 5% of your total mortgage. This will vary depending on your lender and how much time is left on the mortgage you are replacing.
You can be charged with exit fees, arrangement fees, and valuation fees on your new mortgage. The only way you could avoid early repayment fees is if you are on the provider’s standard variable rate which is usually more expensive anyway.
Mortgaging with a new lender
You could obtain a mortgage with a completely new lender. . When you leave your mortgage mid-term you must be prepared for the early repayment charge and exit fees you will potentially incur.
There will be arrangement fees and valuation fees on your new mortgage too. Mortgaging with a new lender can potentially mean obtaining a lower rate. The sale of your current property should pay off the current mortgage debt and any remaining funds can be used to help purchase your new property. This could help to either reduce your loan to value or the term of your mortgage.
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How does my current property affect my new mortgage?
The equity in your current property will greatly affect what sort of rate you will be offered on your mortgage and your ability to secure one. If you are moving into a house that is more valuable and bigger than your current it is referred to as upsizing. Therefore, if you move into a smaller cheaper home it is referred to as downsizing.
Upsizing
If you are planning on upsizing, you must be prepared to prove to your lender that you can afford the monthly repayments on your mortgage. If your current property has risen in value since you purchased it then you will have a higher chance of convincing a lender, this is because there is equity in your property.
You will also be more likely to be accepted by a lender if you have had an increase in pay or have reduced your outgoings. You must also make sure you have kept up with all of your mortgage repayments on your existing mortgage.
Downsizing
If you are moving to a smaller home even though your financial situation hasn’t changed then it will be easier to find a lender to offer you a mortgage. If you are moving because your current property is no longer worth as much as it was this is called negative equity.
If your property is in negative equity, you may find you can only move by following certain restrictions on the type of property you can buy.
How can a Mortgage Broker help?
It is best to seek help from a mortgage adviser if you are looking to move home. They will be able to compare lenders and rates and find the right option for you. They will be able to help you with valuing your current property and making sure you understand what you are doing.
Brokers can help you with your mortgage application and help you understand the type of mortgage you are committing to. Mortgage Brokers understand the current stamp duty rules authorised and regulated by the financial conduct authority and can advise you on this too.
They have an up to date expert overview of the whole of the mortgage market – which is changing all of the time. They can offer one to one personal help and advice completely catered to you. Brokers will not tend to charge for general enquiries too and sometimes only charge once a mortgage is undergoing processing.
A mortgage is a loan secured against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
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