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Mortgage Options For Home Movers
Steven Harmon breaks down the most common questions on mortgages for home movers
What does Home Mover mean?
Home Mover Mortgages can be used when you want to move home or just to change your existing lender or mortgage deal.
What is Porting?
Porting is where you transfer your existing mortgage to your new property when you move home. Most, but not all lenders offer this option, which enables you to stay with your mortgage deal for your new home.
When you port your mortgage, you will need a new mortgage offer, so, although you’re keeping the same mortgage, there’s an additional application with arrangement fees, valuation fees and stamp duty. As porting your existing mortgage is treated as a new mortgage application, it’s important to realise that you can be turned down.
There may be early repayment charges to pay when you port your mortgage, however, this will depend on your individual terms and some lenders may offer the service for free.
Can I increase my loan amount when I port?
Lenders’ criteria will vary, with some allowing additional borrowing to purchase a more expensive property, and others not. Your personal circumstances will also be considered and you’re likely to have to prove you can afford higher monthly repayments on your mortgage, in order to be accepted.
Your lender may insist that you take an additional mortgage if you want to borrow additional funds. In this case you could potentially have two different mortgage rates with the same lender.
Can I decrease my loan when I port?
Most lenders will allow you to decrease your loan by up to 10% when you port, before you incur charges. If you downsize to somewhere more than 10% cheaper than your current home, you will probably be liable to repay the difference between the two loans to your lender.
How do I know if porting is right for me?
It’s important to establish whether porting is an option for you, as whereas most mortgages include this option, some terms do not allow it. It may be possible, however, to do a product transfer with the same lender or remortgage with a new one.
You should also take your financial circumstances into consideration, as you will need to meet the affordability criteria and credit requirement again.
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Remortgaging
If porting your mortgage is not an option, you can choose to remortgage. If you opt for a remortgage with your existing lender (product transfer) this won’t always preclude you from early exit fees, so it’s often worth looking at other remortgage options to compare costs.
In order to benefit from remortgaging, choosing the optimum time can have a big impact. For example, whilst many applicants save money when they remortgage with a new lender, those with less than £50,000 left to pay on their current home will not usually save due to the early repayment fees and new arrangement fees involved.
Does the value of your current or new home affect your options?
Your current home
Borrowers with equity in their current home benefit from a lower Loan to Value ratio, giving them access to more competitive mortgage deals. Your application is also more likely to be accepted, whichever mortgage option you choose.
For those applicants with Negative Equity (when you owe more than your home is currently worth), lenders are not likely to accept an application to remortgage or even to port your mortgage. You will have a greater chance if you’re downsizing to a smaller home, however.
Your new home
If you wish to upsize to a home that’s higher in value than your current home, you’ll need to satisfy higher affordability and credit scoring criteria for porting and remortgage applications. This will be difficult to achieve unless you have significant equity in your property or your financial circumstances have improved. Downsizing will always be an easier option if you have less equity, although interest rates will be higher for those with a lower Loan to Value ratio.
How The Mortgage Company can help Home Movers
Here at The Mortgage Company, our experienced advisers will consider your specific circumstances and mortgage terms to help you decide whether Porting or Remortgaging is the most suitable option for you.
Because we have access to such a wide selection of mortgage lenders, we can ensure that you find, or keep, the most suitable mortgage product for you. We offer full administrative support and guidance throughout the entire home move process, as well as recommend home insurance products, to ensure your new property is adequately protected.
YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
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