Home Mover Mortgages
What are Home Mover mortgages?
Home Mover is not a particular mortgage product, it relates to the applicant. An applicant who has an existing property and plans to move house is known as a home mover. Home mover mortgage may therefore refer to any mortgage products suitable for applicants classed as home movers.
When you move home, you don’t necessarily have to change mortgages, it’s often possible to remain with the same lender on the same mortgage, known as porting.
What is Porting?
In order to remain on your current mortgage terms when you move home, your lender can usually port your mortgage. Porting your mortgage is simply switching it from your current home to your new one and most lenders should be able to offer this service.
When you port your mortgage, you will need to make another application as well as pay valuation fees and stamp duty on your new home.
If your new home is higher in value than your current mortgage, your lender may require you to take out an additional mortgage. This can end up being more expensive than taking a new mortgage with an alternative lender, in which case porting will not benefit you. Often during a product term, for example during a five year fixed rate period, a mortgage would likely have Early Repayment Charges. These Early Repayment
Charges are waived, if you port your existing mortgage to your new property and remain with your existing lender. They would however likely be payable if you were to arrange a new mortgage with a different lender.
Porting your mortgage is not a guaranteed right and is subject to a brand new application and meeting the affordability calculations and criteria of your current lender at the time of the move. It is therefore beneficial to discuss this with a Mortgage Broker such as ourselves to establish whether porting or a new lender is most cost effective in your circumstances and to help facilitate any porting or new lender application required.
Taking a New Home Mover Mortgage
If it’s not possible, or cost-effective to port your existing mortgage, or it won’t be beneficial for your circumstances, then your other option is taking a new residential mortgage with a new lender from the wider marketplace. Before you consider this, however, you should check out the early repayment charges on your current mortgage. Under the right circumstances, a new lender could save you lots of money, although this is down to individual circumstances and what rates are currently available to new Home Mover clients.
Timing is crucial when you make an application to take a new Home Mover Mortgage. For example, for those who are near the end of their current fixed-rate deal or have gained equity in their property,a new lender can be a great option. Those with large exit fees or with less than £50k outstanding on their existing mortgage are unlikely to benefit.
New Home Mover Mortgage with an existing lender
If your current lender is unable to port your mortgage, you may still be able to arrange a new Home Mover Mortgage with them if you are keen to stay with the same provider. Bear in mind, however, that this is unlikely to excuse you from early repayment fees.
Usually however, if you are unable to port your mortgage with your lender, this is often because you do not meet their lending criteria or the amount they are willing to lend you on your new purchase is insufficient to your needs. So this would only usually be relevant if your existing lender has a new Home Mover client rate that is financially beneficial compared to porting your existing product to the new property.
A new Home Mover Mortgage with a new lender
Obtaining a new Home Mover Mortgage with a new lender has the exact same costs involved as taking a new product and not porting with your current one, so the chances are, a new lender will be more likely to entice you with a more attractive deal.
When you choose to obtain a new Home Mover Mortgage, it may be possible to borrow more from a new lender than the mortgage amount you currently hold with your existing lender. This could allow you to hold back some equity out of the sale, putting down a lower deposit on the new purchase.
How does the value of your current home affect your options?
Upsizing is the most difficult option for home movers, even when their existing property has risen in value. This is because if their existing property has increased in value, so would the more expensive property they are looking to purchase. A higher purchase price without additional deposit monies such as from savings, would likely increase your loan to value ratio, meaning you are less likely to be accepted to borrow the required additional finance at better interest rates.
Choosing to downsize when you move home gives you the best chance to save money. It increases the chance that your application for a new mortgage will be accepted, as repayments on your mortgage will likely become more affordable and your borrowing will likely decrease, assuming your financial circumstances haven’t declined.
It’s also an option for those whose financial circumstances have declined because borrowing less shows financial responsibility and you will have a better chance of meeting the affordability criteria.
In some circumstances, it may even be possible to purchase a lower value home outright with the profit from selling your existing home.
Other than in very few extenuating circumstances, such as relocation for work, it’s unlikely that you would choose to move home where your home has fallen into negative equity. Negative equity usually occurs as a result of a drop in the value of your current home, meaning that you owe more on your mortgage than its current value. Therefore in this instance, if you sold your property, you would have to redeem the remaining balance of the mortgage from savings or other funds.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE