Moving Home Mortgage

What are the primary options when moving home?

You can move home at any point and don’t need to pay off your existing mortgage before doing so. Most lenders allow someone to transfer their current mortgage over to the new property – also called porting.

However, some homeowners find they’re better off looking for a new mortgage deal – especially if it allows them to save money and secure better interest rates.

Let’s explore some of the most popular home mover mortgage options.

Porting

Porting your mortgage is one of the easiest ways to move house because all you need to do is transfer your current deal to the new property. Staying with your existing lender is less stressful because you won’t have to go through an extensive application process.

There’s still an application process, and your lender must approve the mortgage if you need to borrow more.

Your lender might also introduce higher interest rates and stricter terms, so it’s always a good idea to discuss your options before making a decision.

Using the same lender but getting a new mortgage

Another popular option is to stick with your current lender but apply for a new mortgage.

Many people do this because they want to secure better interest rates and repayment terms, which is possible due to the relationship you’ll build with the provider during your initial mortgage term.

However, if you leave your current mortgage, you might have to pay a fee to switch to a new deal. A way to get around this is by being on a lender’s standard variable rate; so it’s essential to look at your agreement before making decisions.

Finding a new lender

If you want a clean break from your lender or cannot find the right deal, switching to a new mortgage provider can give you more flexibility.

Some lenders might offer lower monthly payments or a fixed rate agreement, which gives you more stability during repayment.

However, your new mortgage will come with arrangement fees, and you might have to pay an exit fee to your current provider.

Do you have negative equity?

Unfortunately, house prices and valuations are subject to the property market. If the economy is in bad shape, properties will lose value, which means you could deal with negative equity.

Negative equity occurs when the value of a property falls below your mortgage amount. For example, imagine a property had a purchase price of £250,000, and your mortgage deal makes up £200,000; your equity is negative if the property value falls below £200,000.

Many households in the UK have this problem, which can impact the mortgages you’re entitled to and your affordability.

Which mortgage types are available?

All mortgages have terms and repayment conditions, but the one you get entirely depends on your provider.

Standard Variable Rate Mortgage

Mortgages with a standard variable rate are subject to fluctuations in base rates. You might start on a lower initial interest rate, but this could change if the lender’s base rates increase.

Fixed-rate mortgages

These mortgages are highly popular, as they ensure you’ll pay a set amount each month over an agreed term. For example, your fixed term might last five years, and then you’ll move on to an SVR agreement.

Tracker mortgages

A tracker mortgage is subject to changes with the Bank of England’s base interest rates. If those rates go down, your repayments will follow. But if they increase, you’ll have to budget more each month.

Is an interest-only or repayment mortgage better?

The most common types of mortgages are repayment and interest only. Each has its advantages, but that doesn’t necessarily mean you’ll have access to both options.

Repayment mortgage: Most people are on repayment mortgages, as they’re the more common arrangement. You’ll pay off a chunk of the loan alongside the interest rates each month.

Interest-only mortgage: These mortgages are rarer, but some providers offer them. Instead of paying off the loan, you pay the interest rate only. You’ll have to pay the outstanding amount when you want to exit the mortgage.

Exit fee

An exit fee will sometimes apply, covering the administration required to stop your mortgage. Luckily, the amounts are usually relatively small and won’t interrupt your other financial commitments.

Valuation fees

Your lender will also want to see if the property is worth the price advertised. Nobody wants to loan money if they feel the property’s value will decrease, so the valuation might impact how much you could borrow.

Arrangement fees

As you can imagine, numerous fees are involved with arranging a mortgage. However, home mover mortgages don’t have a set amount, so discussing the arrangement fee before signing anything is essential.

Broker fees

Mortgage advisers work to find you the best terms for your needs and can help you access some great deals. While some charge upfront fees, others will add them to your mortgage repayments, so you won’t have to worry about any financial implications.

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