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Moving house comes with complications. One of those is, what to do with the current mortgage on the property being sold or moved out of. Do you have to pay it off? Do you have to cancel it? Can you leave it and rent out the property? Or… can you take it with you to your new home?
As a home mover, there are a number of this to deal with and with the right mortgage advice, the mortgage for the home move can be dealt with cleanly and without hassle. There are number of options for a home mover mortgage, and The Mortgage Broker Scotland can ensure you chose the right one.
The different options include:
- Porting: If you are on a low interest rate deal, you be able to transfer your current mortgage to the new property. This is called porting your mortgage.
- Home Mover Mortgage: If you are unable to port your mortgage, you will have to pay off your current mortgage and take out a new mortgage. Existing mortgages are usually paid off by the sale of the property.
It is also possible to borrow more. If the new property is more expensive and you want to borrow more money to be able to purchase the new property, then you have three options:
1) Pay off current mortgage and get a new larger mortgage
2) Port your current mortgage, and then increase it with additional borrowing
3) Port your existing mortgage and get additional loan
What do we mean by a home mover mortgage?
A home mover mortgage is not really any different to a standard mortgage. It’s simply the process of getting a new mortgage when you’re moving house, to make sure it’s suitable for the property you’re moving into. You’ll need to ensure that it’s still affordable and meets your changing needs. This could be a mortgage for someone moving to a bigger property, or someone downsizing.
There are various things to consider when moving home. You may be tied into your current lender, which could mean you will need to pay a penalty. This can get a little bit tricky if it’s something that you’re not used to – so a broker can help you navigate the most suitable way to achieve your plans.
What sort of moving costs need to be considered?
This is something that we would chat through with you in our initial conversation. The biggest cost is normally your deposit – but when you’re moving home this can sometimes be taken out of the house if you have good equity.
Other fees will be solicitor’s fees and estate agent fees if you have somewhere to sell. Those fees will vary depending on where you live and the value of the properties you’re buying and selling.
You may also want to consider removal fees and costs if you need to put your furniture into storage for a short period. We can help calculate all these expenses for you so that you know that you’ve got enough to cover every aspect of your move.
How much can I borrow as a home mover?
Lending amounts can depend on the lender and your individual circumstances. Typically you might be able to borrow around four or four and a half times your annual income. But some lenders may go higher than that, to around five and a half times your income.
So when you’re moving house we’ll explore all the options for you. We’ll look at your income, whether that’s employed, self-employed, overtime based etc, and your committed outgoings.
A lot of people assume that as they’ve already got a mortgage in place they can just move that to the new property. That is possible, but we still need to go through the affordability calculations. You might not be borrowing any extra money, but we still need to ensure it’s still affordable given any new changes in your circumstances.
What is porting?
When you’re tied into a deal with your current bank or building society, you can sometimes take the mortgage with you to your new property. The benefit of this is that you can avoid any early repayment charges.
Alternatively, you might currently be tied into a deal on a particularly low interest rate that you want to take to your new property. You do still have to go through the same mortgage checks if you’re porting, but it can save you paying a large penalty that would apply if you signed up with a brand new lender.
Can I port my mortgage if the new home is cheaper?
You can port if the new house is cheaper, but if you’re reducing your borrowing amount then you may have a partial early repayment charge to pay. However, it’s likely to be a lower penalty than if you were to take a brand new mortgage with a different lender. We would go through those calculations to see all the options available for you.
Can I increase the mortgage value when I port?
You can increase your mortgage value when you port and it’s really common for people to do this. If you want to borrow more than the amount outstanding on your current mortgage, you might have a different interest rate on this additional ‘top up’ amount.
We will guide you through the process because having two different parts to your mortgage can get a little bit complicated. We would fully explain it so that you understand the different parts and the interest rates. Again, this is all subject to affordability checks.
How do I decide whether to port or get a new mortgage?
It comes down to your individual circumstances. We would do the calculations for you and check the cost of your mortgage if you were to port versus taking a brand new mortgage. Ultimately, it depends on whether you will incur an early repayment charge, how much this is and what the new interest rate looks like and compared to your current rate.
Sometimes porting can be worth it and sometimes not. Some people will choose this route because they’re not paying out a large penalty and are happy to stay with their current lender.
How does the equity in my home affect my options?
The equity you’ve got in your home could affect a lot of different things. For example, if you were going to buy a bigger property, more equity means you have a bigger deposit to put down towards your new home. A lower Loan to Value on your mortgage means a lower monthly payment – which might make your dream home more affordable.
If you’re downsizing, it often means you don’t need to borrow as much on your new property. You might have more equity in the property than you thought, which could give you a lower monthly mortgage payment. This may mean you can pay your mortgage off more quickly.
House prices are increasing at the moment in most areas, which means you could have more equity in your home than you thought. However, we do occasionally find that some people are sitting in ‘negative equity,’ which means that the balance on your mortgage is higher than the value of your home. In this situation you would need some savings to pay off the debt of your current mortgage and put down a deposit on your new property.
How can a mortgage broker help a Home Mover?
A mortgage broker can be just as useful to a home mover as to a First Time Buyer. Yes, you might have bought in the past, but we don’t expect you to remember the whole process. Most people will remember the fun parts – viewing the property, getting your keys for example – but we can help you through the less exciting parts of the process.
Whether you’re a First Time Buyer or a home mover we can give the level of service that you’re looking for. We’re here to help you through so that you’re not surprised by anything and you get an affordable mortgage that works for you.
Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.There may be a fee for mortgage advice. The actual amount you pay will depend upon your circumstances. The fee is up to 1%, but a typical fee of £495 is payable on offer.