What is a Home Mover mortgage?
Home Mover does not refer to a particular type of mortgage; it’s simply the term used for someone who already has a mortgage and is planning to move house.
The type of mortgage you need as a Home Mover depends on both your personal circumstances, your current mortgage and your lender. You may not have to change lenders at all, or even your current mortgage.
What is Porting?
When you move home, it’s sometimes possible to remain on your current mortgage terms. This is called porting your mortgage and most lenders should be able to offer you this service.
If you decide that porting your mortgage is the best option, it’s important to know that you will still need to complete a new application. You will also need to pay valuation fees and stamp duty on your new home.
If the property you plan to move to requires that you increase the size of your mortgage, the lender will sometimes want you to take out an additional mortgage for this amount. This can be more expensive than remortgaging, so if this is the case, porting may not be the best option for you.
If your lender is unable to port your mortgage for whatever reason, your only option is remortgaging. Before remortgaging, always look into early repayment charges, as these can be required to leave your existing contract, whether you change lenders or not.
In some cases, remortgaging can save you a huge amount of money compared to your current deal. This is rarely the case, however, if you are a Home Mover.
If you choose the remortgage option, the timing of this is crucial. If you’re near the end of your current fixed-rate deal or the value of your current home has risen dramatically, it’s a great time to consider a remortgage. If you have negative equity or your financial circumstances have deteriorated, then remortgaging is unlikely to be an option.
Remortgaging with an existing lender
If it isn’t possible to port your mortgage with your current mortgage provider, you can also consider remortgaging. Unfortunately, this will not necessarily avoid early repayment fees and therefore there is unlikely to be any benefit in staying with them.
A new valuation fee and a new arrangement fee will also still be due if you stay with the same lender. Therefore, unless they can offer an amazingly low interest rate, you’re more likely to benefit from looking for a better deal.
Remortgaging with a new lender
Another option you have is to consider remortgaging with a new lender. You should, of course, keep in mind the exit fees involved in this.
It’s possible to use your remortgage to pay off your existing mortgage, and borrow an additional amount towards your new home.
It might even be possible to pay off the remaining mortgage on your current home in full through it’s sale. You could consider adding any early repayment fees to the asking price, to keep your losses to a minimum.
How does the value of your current home affect your options?
Upsizing is easiest for those Home Movers whose property has gone up in value. This will lower your LTV (loan to value) amount, which increases your chance of acceptance and the availability of better interest rates.
If your new home is cheaper than your current home, you have the best opportunity to save money. Downsizing increases the chance of your remortgage application being accepted, especially if your financial situation hasn’t improved since your first application.
If you choose to downsize, you’ll either benefit from lower monthly repayments or it may even be possible to purchase your new home outright. As your current home is a higher value, the profit from it’s sale should cover the cost of your new property.
There are very few lenders who will consider a remortgage if your home is in negative equity (the value has fallen since purchase). There are a few extenuating circumstances, such as relocation for work. It’s best to speak to a Mortgage Broker for advice if this is your situation.
How a Mortgage Broker can help find you the most appropriate deal
Whilst mortgage calculators can help find lots of mortgage deals, it’s worth bearing in mind that they will not be able to offer a whole market view. A Mortgage Broker, however, has access to specialist mortgage deals that are not readily available to mortgage applicants.
They can also advise you throughout the process of porting or remortgaging your home, saving you time and money. They can also save potential disappointment and a negative mark on your credit score from failed applications. Looking at your personal circumstances will allow them to match you to the lender most likely to accept your application.