If you want to move house, what happens to your existing mortgage, can you just transfer your mortgage?
Can you just take your mortgage with you and use it to buy your new home?
Or do you need to get a new mortgage?
In this article I’m going to be looking at whether or not the decision you make will increase your debt, how to keep costs down, and whether size makes any difference…
I’m sure you remember your first time; the anticipation, the excitement, the sweaty palms, knowing how important it is that you get it right. The second time’s bound to be easier isn’t it?
I’m talking of course about getting a mortgage, you filthy animal!
You survived the mortgage process the first time, however it doesn’t mean it will be easier this time.
Especially as this time around it’s likely you’re selling as well as buying, which adds a whole new layer of stress.
But don’t let mortgage anxiety put you off having another go, allow me to gently guide you through the experience.
What Can I Do With My Mortgage When I Move House?
As you can probably guess from the name, this means transporting your current mortgage to your new property.
Sounds nice and simple doesn’t it?
However, you will still have to go through the same application process you did when you bought your first home.
This includes supplying all the documentation regarding your income, outgoings and credit worthiness.
The lender gets a fresh opportunity to decide whether they are still happy to lend you money and how much!
If your new house is more expensive, you’ll need to increase the amount you are borrowing.
You may need to borrow the extra amount on a separate mortgage and conditions to your original mortgage that’s porting.
Be aware there may be an arrangement fee, so check with your lender or broker how much it is.
Regarding fees, this second loan may have a higher interest rate, so be mindful of that as well.
Switching Mortgage Product With Your Current Lender
You could replace your current mortgage entirely and start a new one from scratch with your current lender.
This could be a good way to find a better rate, which could be beneficial in the long run – but you may incur extra costs in the short term!
To leave your current mortgage deal when you’re still part way through a fixed or tracker rate period, there’s likely to be an early repayment charge – probably somewhere between 1% and 5% of the total value of your mortgage.
This percentage will often depend on how much time you have left on your fixed or beneficial rate product.
If you are on your provider’s standard variable rate mortgage, you won’t be charged an early repayment fee.
Check with your lender or broker on how much fees are going to set you back, and then weigh it against how much money you will save through getting a better rate.
Getting A Mortgage With A New Lender
Of course you don’t have to stick with your current lender. You could change to an entirely new one.
You would then use this loan to pay off your existing mortgage when selling your home.
However, (come on, you knew there’d be a ‘however’), there are normally early repayment charges and exit fees when leaving your existing mortgage early.
Plus, don’t forget the arrangement and valuation fees on your new mortgage.
Is There A Way To Cut Costs When You Move Your Mortgage?
There are some things you can do to save yourself some money mortgage-wise when you’re moving home; the first one just requires a little patience.
If you have a fixed-rate mortgage, wait for the term to end!
This allows you to switch to your lender’s standard variable rate (SVR).
Even though SVRs normally have a higher rate of interest, there are no early repayment charges if you choose to come out of your deal.
Your fixed-rate mortgage will probably last between 2 and 5 years. So unless you’re desperate to move, you could hold off until you swap over to an SVR.
Alternatively you could port the mortgage as we have already discussed.
Does Size Matter?
But you’ll be pleased to know that only when it comes to houses and mortgages.
The rates offered will depend on whether you’re going bigger or not.
Which makes sense…
Moving to a bigger, more costly house means proving to your lender that you can handle the larger payments.
If your current house has increased in value from the time you purchased it; your chances will be higher as this will give you a larger deposit for your new property.
Firstly you will need to satisfy your lender that you can afford it; all lenders these days assess how much you can borrow based on the principle of “affordability”.
Affordability is an assessment which takes into account:
Your total income
Committed outgoings such as loans, credit cards, etc and
Day to day expenditure.
The number of children that you have will also have a bearing on the lending amount!
Your lender needs to be satisfied that you are not borrowing beyond your means, and that you can comfortably afford the monthly repayments without having to put your children on rations!
It’s worth knowing that if you have experienced difficulties in making your mortgage repayments in the past, you’ll struggle to get a mortgage for a new property, regardless of whether it’s more expensive or not.
If you’re going smaller and cheaper it goes without saying that your loan will be smaller; which means your repayments will decrease too.
You might even find yourself in a fortunate enough position to buy your home outright if:
your current house has increased in value enough
that the difference between that and the new house is big enough.
What If My Current Home Has Decreased In Value?
If your house is worth less now than when you bought it then you will have less equity; which means a smaller deposit for the next house.
Furthermore, if when you purchased the property you managed to do it with a very small deposit (say 5%); then there is also the chance that you could be in negative equity.
If you’re in this situation, it is unlikely you will find a lender willing to give you a new mortgage.
Don’t think, “I can’t move my current mortgage?”. Think if your property value has fallen, then it’s likely that the one you want to buy has also fallen too! So it may not be as bad as you might think.
How Do I Find The Best Deal On A Home Movers Mortgage?
Having already been through this, you’ll be aware that there are many providers and options available to you.
Getting a mortgage can be time-consuming and often complicated.
Before you start looking at houses – whether it’s your first home or your 50th, there is one simple rule:
I would always recommend speaking with a mortgage broker or financial advisor.
The financial world moves very fast, and unless it’s a sector you are familiar with, it can be hard to keep up with what changes have happened – and that could personally affect you and your financial plans.
A professional broker will do all the price comparison work for you. Brokers are regulated and will always focus on finding you the right mortgage deal.
Need Mortgage Advice?
Hopefully this has helped answer the “Can I move my current mortgage to a new house?” question.
If so, be sure to check out our Mortgage section for other articles that we hope will help you further.
You may be interested in reading:
If you need help getting a mortgage, we’re only a phone call away – and we’d love to help.
Your home may be repossessed if you do not keep up repayments on your mortgage.