The Mortgage Process When Moving House: What You Need to Know.
We explore options available in detail and provide practical steps that homeowners can take to ensure a smooth transition when moving house. It also addresses common questions, such as how to move house without changing your mortgage and using equity as a deposit for moving to a new home.
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Moving house can be an exciting time, but it can also be a stressful and overwhelming experience. This is especially true when you have a mortgage to consider. Whether you are upgrading to a larger home or downsizing to a smaller one, moving with a mortgage can be a complex process. It's essential to understand your options when it comes to your mortgage and how it will affect your move. In this blog, we will explore the different options you have when moving house with a mortgage and the steps you can take to ensure a smooth transition.
What Are My Mortgage Options?
When moving house, you have two primary mortgage options: porting your mortgage or getting a home mover mortgage. Let's take a closer look at each of these options.
Porting Your Mortgage
Porting your mortgage is the process of transferring your existing mortgage to a new property. This option is popular among homeowners who want to move house but want to keep their current mortgage deal. The benefits of porting your mortgage include keeping your current interest rate and avoiding early repayment charges.
However, porting your mortgage is not always straightforward. There are several factors that can affect your ability to port your mortgage, including the value of your new property, your financial circumstances, and your lender's policies. For example, if your new property is worth less than your current property, you may not be able to port your mortgage.
Additionally, if you have experienced a change in your financial circumstances, such as a reduction in income, your lender may not approve the porting of your mortgage.
It's important to speak with your lender to understand your options and the requirements for porting your mortgage. You may also want to consult with a mortgage advisor to help you navigate the process.
Getting a Home Mover Mortgage
Another option for moving house with a mortgage is to get a home mover mortgage. This type of mortgage allows you to borrow additional funds to purchase your new property while paying off your existing mortgage. Home mover mortgages are a popular choice for homeowners who want to move to a more expensive property or those who want to borrow more money to make improvements to their new home.
The benefits of a home mover mortgage include the ability to borrow additional funds and take advantage of new mortgage deals. However, this option also comes with some risks. You may end up paying a higher interest rate than your current mortgage, and there may be early repayment charges if you pay off your existing mortgage early.
It's important to speak with a mortgage advisor to understand the costs and risks associated with a home mover mortgage. You should also consider your financial circumstances and whether this option is the best choice for your needs.
Steps to Take When Moving House with a Mortgage
Regardless of whether you choose to port your mortgage or get a home mover mortgage, there are several steps you can take to ensure a smooth transition when moving house.
Step 1: Speak with Your Lender
Before you start house hunting, speak with your lender to understand your options for porting your mortgage or getting a home mover mortgage. Your lender can provide you with information on the fees and requirements for each option and help you determine which choice is best for your needs.
Step 2: Get Pre-Approved for a Mortgage
If you are getting a home mover mortgage, it's essential to get pre-approved for a mortgage before you start house hunting. This will give you an idea of how much you can afford to borrow and help you set a realistic budget for your new home. Speak to a Hello Mortgage friendly adviser who can give you a pre-approval in minutes.
Step 3: Work with an Estate Agent
When buying a new home, it's essential to work with an estate agent who can help you find the right property and negotiate the best deal. Your estate agent can also provide you with valuable insights into the local market.
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What if I Need a Larger Mortgage?
If you need a larger mortgage to move to a more expensive property, you may be able to increase your borrowing amount with your current lender. However, your lender will need to assess your financial circumstances to ensure you can afford the increased mortgage repayments.
If your lender cannot provide you with a larger mortgage, you may need to consider remortgaging to a new lender or getting a home mover mortgage. In either case, it's important to speak with a mortgage advisor to understand your options and the costs involved.
Can I Move House Without Changing My Mortgage?
If you are happy with your current mortgage deal, you may be able to move house without changing your mortgage. This option is possible if your current lender offers porting your mortgage to a new property.
However, as previously mentioned, there are several factors that can affect your ability to port your mortgage. If your new property is worth less than your current property or if your financial circumstances have changed, your lender may not approve the porting of your mortgage.
It's important to speak with your lender to understand your options and whether porting your mortgage is possible.
Can I Use Equity as a Deposit for Moving House?
If you have built up equity in your current property, you may be able to use it as a deposit for moving house. Equity is the difference between the value of your property and the outstanding mortgage balance.
This typically involves selling your current property, repaying the existing mortgage, and using the money left over to use as a deposit on your next home.
It may be able to raise the equity from your current home and use this to buy another 2nd property or investment property without selling your home. This could lead to you paying a higher rate of stamp duty on the second property/investment property.
You need to carefully consider your options and should speak with one of our Mortgage Advisers.
Moving to a Cheaper House with a Smaller Mortgage
Moving to a cheaper house with a smaller mortgage can be a great way to reduce your monthly mortgage payments and improve your financial stability. To do this, you will need to sell your current property and purchase a new property that is cheaper than your current property.
When looking for a new property, it's important to consider the costs involved, such as stamp duty, legal fees, and moving costs. You should also consider the impact of downsizing on your lifestyle and whether the new property meets your needs.
To finance the purchase of the new property, you may be able to use the proceeds from the sale of your current property. If you have a mortgage on your current property, you will need to pay off the mortgage balance before using the remaining proceeds to purchase the new property.
What if I Port My Mortgage to a Cheaper House?
Porting your mortgage to a cheaper house can be a great way to reduce your monthly mortgage payments and improve your financial stability. But, you could trigger an early repayment charge if you are still within a fixed rate deal.
When porting your mortgage, your current lender will assess your financial circumstances to ensure you can afford the reduced mortgage payments. If your financial circumstances have changed, your lender may not approve the porting of your mortgage.
Additionally, there may be fees involved in porting your mortgage, such as early repayment charges, product fees, and legal fees. It's important to speak with your lender to understand the costs and risks involved in porting your mortgage.
What if I'm in Negative Equity and Want to Move House?
Negative equity occurs when the value of your property is less than the outstanding balance of your mortgage. This can make it difficult to sell your property and move house, as you may need to repay the difference between the sale price and the outstanding mortgage balance.
If you are in negative equity and want to move house, there are several options available to you. These include:
- Waiting until your property value increases: If you are in negative equity, it may be worth waiting until the property value increases before selling your property. This can help you avoid having to repay the difference between the sale price and the outstanding mortgage balance.
- Negotiating with your lender: You may be able to negotiate with your lender to transfer the negative equity to your new mortgage. However, this can be a complex process and may not be available with all lenders.
- Selling your property and repaying the difference: If you are unable to negotiate with your lender or wait for the property value to increase, you may need to sell your property and repay the difference between the sale price and the outstanding mortgage balance. This can be a difficult decision, and in many cases this is unachievable because the repayment could clear out your deposit for the new property.
What Happens If I Don't Intend to Move Immediately?
You can still get mortgage ready! Our Mortgage Advisers can give you all the advice you need and help you understand all your options before securing you a decision in principle.
When you are ready to move, this will give you more confidence as you will be fully informed.
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What Fees Will I Pay When Taking Out a Home Mover Mortgage?
When taking out a home mover mortgage, there are several fees and charges that you may need to pay. These can include:
- Product fees
Some mortgages may have product fees, which are one-time fees charged when you take out the mortgage. These fees can vary depending on the lender and the type of mortgage you choose.
- Valuation fees
Your lender may require a valuation of the property before approving the mortgage. Valuation fees can vary depending on the lender and the property value.
- Legal fees
You will need to pay legal fees for conveyancing services, which are required to transfer the ownership of the property. Legal fees can vary depending on the solicitor and the complexity of the transaction.
- Stamp duty
If you're purchasing a new property, you may need to pay stamp duty. The amount of stamp duty you pay will depend on the property value and the location of the property.
It's important to factor in these fees when considering a home mover mortgage. You should speak with your lender and a mortgage advisor to understand the costs and risks involved in taking out a home mover mortgage, and to ensure that you're getting the best deal possible.
In conclusion, moving house with a mortgage can be a complex process, and it's essential to understand your options and take the necessary steps to ensure a smooth transition.
Whether you choose to port your mortgage or get a home mover mortgage, speaking with your lender and a mortgage advisor can help you navigate the process and make informed decisions. It's important to consider your financial circumstances, the costs, and the risks associated with each option before making a choice. Working with an estate agent can also provide valuable insights into the local market and help you find the right property.
Using equity as a deposit can be a viable option, but it's crucial to weigh the costs and risks involved. Overall, with the right guidance and preparation, moving house with a mortgage can be a manageable and successful experience.