People move homes in the UK for all sorts of reasons. Some don’t like their small house and upgrade to a larger one. Some are the opposite and want to downsize. Or simply relocating because they like other neighborhoods better. Either way, it can come with some obstacles, and those challenges become even more intense if a mortgage is in question. This is where a home mover mortgage comes in the picture.

You need to understand how a home mover mortgage works, and we are here to help you. Let’s break down the options available, explain the entire process, and discuss some key things you need to keep in mind.

What is a Home Mover Mortgages?

In simple terms, as its name explains, it’s a mortgage for people who are moving from one place to another. For those who are on a mortgage with their current house, they can transfer (also known as port) the existing mortgage to the new home to apply for a new mortgage. 

So if you still have an outstanding mortgage balance on your current home, you need to understand which option will work for you when you are moving homes. Remember that this decision of home mover mortgage can affect your finances and affordability. 

How Does a Home Mover Mortgage Work?

• Porting your existing mortgage.

Many lenders in the UK are okay with porting your current mortgage deal to a new property. This is good news for those who have favour table terms. However, it may not be so straightforward. Your lender will again assess your financial situation to see your qualifications and if your new property is more expensive, you may need to apply for additional borrowing which can come at a different rate.

• Applying for a New Mortgage

If your current deals can improve, applying for a new mortgage when moving home could help you land a better deal. This option works well for people whose financial situation has improved since they took out the original mortgage. Drawbacks can include early repayment charges if you end your current mortgage too early.

What Shall I Keep in Mind?

Early Repayment Charges (ERCs)

Check if your current deal has early repayment charges. If you exit a fixed or discounted rate too early, you may be charged a fee, which typically ranges from 1% to 5% of the remaining balance.  

Property Valuations

If you decide to go for a moving home mortgage, the value of your new property plays a massive role. In some cases, a lower valuation may increase the amount of deposit you need to pay as lenders might consider it high risk. 

Affordability and Stress Tests

Making consistent, on-time payments on your current mortgage definitely helps your case for a moving home mortgage​, but lenders will still reassess your affordability, especially if your financial situation has changed. They might even run a stress test, where they simulate higher interest rates to see if you can still manage your payments comfortably.

Time Sensitive Transactions

Managing both the sale of your current home with the purchase of a new one is not only stressful, it may cause some complications. Suppose your current home takes longer to sell, the purchase of the new property may also take longer. You may lose offers or have to pay increased fees.

Additional Borrowing

If your new home is more expensive than your current property, you will need to borrow more. When porting, this could mean taking on extra loans, where terms and rates are different. 

Deposit

While a big deposit isn’t always a must, putting down more can help you snag lower interest rates. If you’ve built up enough equity in your current home, you can use it as a deposit for your next one. Make sure you discuss deposit requirements with your potential lenders early on. 

Costs of Moving

Moving comes with a lot of extra costs that can pile up and be a burden. Make sure your moving budget includes: stamp duty (if it applies), legal fees, valuation costs, moving expenses, and any potential refurbishment or repair costs.

Is Switching Mortgage Lenders a Good Decision?

Porting may seem like the easy way out but it might not be ideal in a lot of cases. Switching lenders gives you an opportunity to find a better deal. If interest rates drop, a switch can be particularly beneficial. Some lenders also offer special deals for moving home mortgages​ such as discounts that a broker can help you access.

On the other side, switching lenders can be cost-heavy if ERCs are involved and your new lender’s requirements may be more strict than your current lender’s criteria.

Securing a Home Mover Mortgages

Assess your current mortgage deal.

With the help of a professional, check if porting can save you money and is a viable option. If not, you shall start looking for a new mortgage.

Check your finances.

Moving involves a bunch of expenses, but beyond that, you’ll need to budget for deposits and fees. Plus, a larger deposit can boost your chances of landing a mortgage when moving home​.

Get pre-approved.

Getting a mortgage agreement in principle before making an offer on a property can show sellers that you’re a committed and serious buyer.

Apply for a new mortgage.

If you are not going to port, start looking for a new moving home mortgage​ and begin the application process. Being an early bird helps avoid delays.

Complete the move.

Once all formalities are done from your end, and your application is accepted, lenders will conduct property valuation. You will then shift to the legal steps of completing the sale and transferring the mortgage. 

Common Myths About Home Mover Mortgages

“Porting my mortgage is always cheaper.”

Not exactly. You must compare the total costs of porting versus switching to a new mortgage when moving home. Porting can be very expensive if additional borrowing is involved. 

“You can only get a mortgage with your current lender.”

You are free to explore other lenders and more times than not, it can pan out to be very beneficial. Shopping for new mortgage deals can get you better terms or even incentives.

“Moving home automatically improves your mortgage offer.”

This isn’t always true. Since taking out your mortgage, if your financial situation has worsened like a lower credit score or a default, better terms may not be in the picture. In some cases, you could end up with a higher rate or more restrictive terms.

 “You can avoid the stress of affordability checks by porting.”

Even if you’re porting your mortgage, lenders are legally required to conduct affordability checks. Porting doesn’t exempt you from reassessing your financial health. 

Conclusion

Securing a home mover mortgage requires planning carefully and making some important decisions. It is a complex process. Therefore, taking the help of an expert can make all the difference and ensure a smoother and hassle-free mortgage experience.

You can find the most suitable mortgage for your situation with UK Mortgage Finder. If you are looking to move with the right guidance, contact us today to be connected with industry experts. Take the next step towards securing your new home.