Home Mover Mortgages
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Home Mover's Frequently Asked Questions
Listen below as Richard Crow talks all about mortgages for home movers.
In less than 15minutes, you’ll know a lot more about getting your mortgage sorted.
What do we mean by home mover mortgages?
A home mover is somebody that already owns their own home and wants to move properties. Perhaps they want to get a bigger home if the family is growing, or to downsize once the family has flown the nest. A home mover mortgage is a mortgage to suit someone in this situation.
What costs need to be considered as a home mover?
It can be quite costly. First you’ve got to think about your deposit, although this will often come from the equity in your existing property. People may wish to add their own savings to this to make the deposit larger.
You’ve then got solicitors fees – this isn’t just for First Time Buyers. Plus, because you are selling your property you’re probably going to need an estate agent. They usually charge one to two percent of the property sale price. Then of course you may need removal transport, especially as you will have acquired quite a lot of furniture and possessions since you bought your home.
Two things which you may not have considered are storage costs and temporary accommodation. You might need these if there are problems in the buying chain, where you need to sell your home but the property you’re buying isn’t ready.
How much can I borrow as a home mover?
This will vary depending on your specific situation. We will need three months’ payslips and your credit report to assess your borrowing capacity.
One difficulty is if your property is on the market, we don’t know how much it will sell for. The price you’re offered can affect the amount of deposit you can put down.
If you’ve been in your job for less than six months, we will ask for a copy of your contract – this can also affect mortgage affordability. It’s important to get this all done from the very beginning.
What is porting?
Porting is when you take your existing mortgage and move to a new house, which is useful if you potentially have a large early repayment charge.
You might have taken out a fixed mortgage for five years, for example, but six months a year down the line you decide to move home. That could incur a large early repayment charge. In this situation it may well be worth porting your mortgage instead of taking out a new one.
Can I increase the mortgage value when I port?
Yes, but again this depends on affordability. It’s important to have a broker do an affordability check with your current lender to make sure that in the first instance, this is even an option.
If affordability allows, you can increase your mortgage by taking what’s called a ‘further advance’. This is often at a different rate to your current deal.
There’s a chance that by staying with your existing lender on their rates and terms you might be missing out on more favourable terms and rates elsewhere. Your broker will help you assess if it will be better for you to look at remortgaging rather than porting.
Speak To An Expert
What we really enjoy is being part of one of the most important purchases in people’s lives. It is incredibly special to witness the excitement and emotion when people receive their mortgage offer.
Whether it’s your first time, moving home, investing or just looking for a better rate we would love to hear from you.
Can I port my mortgage if the new home is cheaper?
Yes, but it is a little bit more difficult. The challenge is the Loan to Value – which is the percentage of the property that the lender owns. If you are moving to a cheaper property and you wish to keep your loan the same, it will seem to the lender that the risk to them has increased.
You may well find that your lender will ask you to pay a chunk off of your mortgage to keep the Loan to Value and risk the same as your current mortgage.
How do I decide whether to port or to get a new mortgage?
Speak to a broker, because we can compare the options for you. We’ll cost out staying with your current lender to avoid your early repayment charge against moving to a new lender. Depending on the rates available with a new lender, you may actually find that you’re better off paying the early repayment charge. But we’ll do all the calculations so that you can make an informed decision.
How does the equity in my home affect my options?
The more equity you have, the more you can put down on your new property. That will reduce your Loan to Value on the new property which means better, lower rates.
The smaller the deposit, the higher the rate that you’re potentially going to pay on your new mortgage.
How is moving homes affected by upsizing, downsizing and negative equity?
Upsizing is quite simple. You’ll either need to put down your own savings, get a further advance with your current lender or just transfer to a new lender.
With downsizing, lenders often don’t like it if you’re increasing the Loan to Value. This confuses a lot of people because the amount of the loan doesn’t change, but the lender sees it to be more risky to lend £150,000 on a £200,000 home compared with a £400,000 home. So you may be asked to reduce your mortgage to stay at the same risk level as per your previous property.
Negative equity is where you owe more on your mortgage than what your property is worth. If you sell your property you’re going to be left with a shortfall – so you need additional funds both to pay that shortfall off and put down a deposit on a new property as well.
What advice do you have for Home Movers?
I always recommend that you get a Home Buyer’s Report or a RICS surveyor’s report. They can be expensive, but it’s better to pay £1,000 for a full survey and find out that the roof needs £30,000 spending on it before you commit to buying. The survey is an investment – it could mean you can negotiate and get the property for less.
It’s good to be realistic about timing as well. Sometimes clients come to us expecting to have completed their purchase within six weeks – that’s highly unlikely. Part of our job is about managing people’s expectations so that when things don’t go how they’d hoped, you’ve pre-warned them.
Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.