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Home Mover Mortgages – what are the options?
If you’re planning to move house there is a lot to consider – and the mortgage process is just one part of it. It’s important to be clear about your mortgage options, so let Mortgage Marketplace explain how home mover mortgages and porting could work for you.
What does Home Mover mean?
There are three main types of mortgage borrowers: First Time Buyers, Home Movers and Remortgagers. As a Home Mover who is buying and selling a home simultaneously, there are two main options open to you: porting your existing mortgage or taking out a new loan.
What is Porting?
Porting is where you transfer your current mortgage to your new property. You stay on your current mortgage deal – for example a two year fixed-rate mortgage – even though you’re changing properties.
It’s appealing because it can be simpler than remortgaging, and you can usually avoid paying an early repayment fee. These fees are common with fixed-rate mortgages and can reach 5% of the overall loan.
Porting does mean that you have to reapply for the mortgage. Arrangement fees and valuations often apply and you will be reassessed by the lender.
Occasionally porting applications can be refused. Common reasons include a drop in earnings or a drop to your credit score since the mortgage began.
Please note not all lenders offer porting so it is worth checking the terms of your existing agreement.
Can I increase the mortgage loan when I port?
If you’re moving to a more expensive property you can increase the loan amount when porting – subject to lender approval. Whether you’re accepted will depend on your specific situation.
If a lender isn’t happy to increase the loan, they can suggest you take out an additional mortgage instead. This way, you have two different mortgage products running with the same lender.
Can I decrease the size of the mortgage when I port?
Porting a mortgage is simpler when downsizing to a smaller home. Most lenders agree to this, but you should be aware that a mortgage decrease of more than 10% might mean you might have to pay an early repayment charge.
How does the value of my current home affect my options?
You’ll be in a strong position if you have good equity in your home. This is where the amount you owe on the mortgage is less than the property value. You may have paid a lot of the loan back, or local house prices have gone up a lot since you bought the property.
With a lower Loan to Value ratio – 80% or less – you’ll get better rates and more choice of lenders.
On the other hand, if you have low or even negative equity (where you owe more than your home is worth) it will be much harder to port your mortgage, unless you’re downsizing. If you have a good cash deposit for the new home it may be simpler to get a new mortgage deal.
What impact does the value of the new home have?
To port your mortgage to a more expensive home you’ll need to meet the lender’s affordability criteria for the new loan amount. They will usually limit the loan to 4-5 times your household income, so having a high level of equity or a cash deposit on top will be helpful.
Downsizing is much simpler as you won’t be asking to borrow any additional funds.
How do I know if porting is the right approach?
First, find out from your lender if porting is an option on your current mortgage deal. Then it’s a case of exploring and comparing the options, both porting and remortgaging. If your lender won’t allow porting, you could also explore remortgaging to a deal that is portable.
You will need to look at early repayment charges, arrangement fees, mortgage rates and monthly repayments, it can get quite complicated. You can start by using an online mortgage calculator, but many people seek out the support of a Mortgage Broker to do all the research for them.
How can a Mortgage Broker help with a Home Mover mortgage?
Mortgage Marketplace is here to make it easier and less stressful to move home. By looking at your specific situation and property plans we’ll recommend the most cost-effective way forward.
Our mortgage advisers will confirm your property budget, get you an Agreement in Principle and assist with the application. We can also help you budget for stamp duty, discuss mortgage protection and home insurance, and answer any questions along the way.
We’re fully authorised and regulated by the Financial Conduct Authority, so get in touch today for an initial chat.
Frequently Asked Questions
Call us today on 0800 170 7474 to discuss your borrowing potential and eligiability.
Typically, the mortgage process will take 2-6 weeks to reach approval.
A mortgage offer is usually valid for 6 months.
Please be aware, the process is currently taking longer due to Covid-19. Please see question ‘How has Covid-19 affected the mortgage market?’.
Whilst you are not required to take out a life cover, our job is to ensure your mortgage is affordable, no matter what. It may not be nice to talk about, but if something were to happen to you, you want to know your family and investment are safe.
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