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Home Mover Mortgages – what are your options?
Moving house is a big life event – there is a lot to consider before you take the plunge. One important decision is how you will get a mortgage for the new house. Easy Street can help you consider your options for a Home Mover mortgage.
What do we mean by Home Mover?
Mortgage providers view customers as either First Time Buyers, Home Movers or Remortgagers. It helps them to understand your situation and priorities.
When you’re moving house, the main avenues open to you are to ‘port’ your existing mortgage or take out a new loan. This means that you may stay with your current lender or may find a new one. Please note it is important to read the terms of your existing mortgage carefully as not all mortgages are portable.
What is Porting?
Porting a mortgage means moving it over to the new property. Essentially, you stay on your current mortgage deal even though you’re changing properties.
It can sound simpler than trying to end one mortgage while starting a new one. However, porting will still mean reapplying for the mortgage, and potentially paying arrangement fees and valuation fees. Your lender will also reassess you against their affordability criteria.
As a result, they could reject your porting application, especially if your income or credit rating has fallen since you originally arranged the mortgage.
One of the key advantages of porting is avoiding early repayment fees, which often apply to fixed-rate mortgages. When you exit your deal early, some lenders will require you to pay as much as 5% of the original loan in a fee.
Can I increase the mortgage value when I port?
If you are moving to a more expensive home, you could ask to increase the loan amount. Approval will depend on the lender’s criteria and your financial situation.
Another option is to take out an additional mortgage with the lender for the extra value – so you have two different mortgage products with the same provider.
If you’re moving to a more expensive home you’ll need to meet the lender’s affordability and credit scoring criteria for the new loan amount. This is the case whether you port or take out a new mortgage. Good equity or an increase in your household income will help secure you the loan.
Can I port my mortgage if the new home is cheaper?
Porting a mortgage to a smaller property is usually straightforward, as you won’t be borrowing any additional money.
However, if the total mortgage loan decreases by more than 10% you might need to pay an early repayment charge. A mortgage adviser could explore the options for you.
How does the equity in my home affect the options?
It’s helpful if you have a good level of equity in your home – this could be because you have paid off a considerable amount of the mortgage, or the property has gone up in value since you mortgaged it. Mortgage providers are very focused on the Loan to Value ratio. If you have a low ratio, you’ll get better rates and more choice over whether you port or move to a new lender.
High Loan to Value is where your mortgage makes up 85% of the property value or more. Owing more than your home is worth is known as negative equity. In either of these situations lenders are less likely to let you port your mortgage, unless you’re downsizing.
If you choose to take out a new mortgage, you will have a smaller choice of lenders and rates will be higher.
How do I decide whether to port or get a new mortgage?
You could talk to your existing lender about whether the option to port is available on your current mortgage. Then compare the potential rates and fees with new mortgage options to ensure you’re getting a competitive deal.
Many people choose to get a Mortgage Broker to help, because comparing fees, mortgage rates, criteria and early repayment charges can be time-consuming and complicated.
You should also confirm that the potential monthly repayments on your mortgage will be comfortably affordable, as your home may be repossessed if you fall behind.
How could a Mortgage Broker help with a Home Mover mortgage?
Working with Easy Street makes moving home less stressful. By getting to know you, your situation and property goals we can explore the lenders and products that could work for you.
We’ll compare lots of options to recommend a suitable mortgage deal, and then secure an Agreement in Principle so that you’re ready to make an offer on the new property. We’ll then support you through the mortgage application process and beyond, until you pick up the keys to your new home.
Easy Street is authorised and regulated by the Financial Conduct Authority, making us a reliable source of mortgage advice. If you’re thinking about moving home, get in touch with Easy Support for expert support and guidance.