Table of Content
Jamie Elvin discusses everything you need to know about mortgages for home movers.
What do we mean by a home mover mortgage?
A home mover mortgage is designed for those moving house and needing a new mortgage to buy their next property.
Typically offered by banks, building societies, and other lenders, these mortgages work similarly to standard mortgage products. One of the key differences between a home mover mortgage and other types of mortgages is that you may be able to transfer your existing mortgage to your new property.
This is known as “porting”, and it can help you maintain a competitive interest rate while avoiding early repayment charges.
How do home mover mortgages work?
Moving home is stressful enough. And having to navigate the mortgage process alone can feel overwhelming. Strive Mortgages offers expert advice, supporting you every step of the way.
Here are the general steps involved in selling a home and buying a new one:
- Determine your budget: Before looking for a new home, consider your affordability. This includes your income, credit score, and financial commitments. While you can use a mortgage calculator, an adviser can assess your mortgage affordability and credit report more accurately and help secure an agreement in principle.
- Find an estate agent: A good real estate agent can help determine the valuation or purchase price of your existing home, arrange viewings, and negotiate the sale with potential buyers.
- Prepare your home for sale: Improve your home’s appeal by decluttering, making repairs, and staging it for viewings.
- List your property and accept an offer: Once listed, potential buyers will make their offers.
- Apply for a mortgage: Once you’ve accepted an offer on your home, the mortgage completion process begins. Check if your lender allows you to port your mortgage. Otherwise, explore other mortgage offers.
- Find a new home and make an offer: Once you’ve secured financing, work with your mortgage adviser to find a new home that meets your needs and budget and make a competitive offer.
- Finalise the mortgage and legal process: Your lender will conduct a valuation of the new property before issuing a mortgage offer. You’ll need to cover conveyancing fees, legal fees, and land registry fees and arrange building insurance. Engaging with experienced mortgage experts can ensure all legal aspects are handled efficiently.
- Close the sale and move: Once the mortgage process is complete, including the ownership transfer, your mortgage money is released. Arrange for removal services, update utilities, and ensure your home insurance is active.
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What moving costs need to be considered?
Moving home in the UK comes with several expenses, some of which can be significant. Here are the main costs to factor into your budget:
Deposit
When buying a new property, you’ll usually need a deposit of at least 5% of the purchase price. However, the required amount depends on the lenders’ criteria and your affordability.
Mortgage arrangement fees
Lenders may charge arrangement fees for setting up a mortgage, ranging from a few hundred to several thousand pounds.
Valuation fees
Lenders often charge a valuation fee to assess the property you are purchasing. This will typically cost between a few hundred to a thousand pounds.
Surveys
A property survey provides insight into the home’s condition and highlights any structural issues that may need to be addressed.
Legal fees
You’ll need to pay a solicitor or conveyancer to handle the legal process. This includes conveyancing fees and mortgage deed registration. Costs vary based on the complexity of the transaction.
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Stamp duty
Stamp duty is a tax on property purchases above a certain threshold. The amount depends on the property value and whether you are a first-time buyer or not.
Removal costs
You will need to consider the cost of hiring a removal company or renting a van to transport your belongings.
Budgeting carefully for these costs is essential when moving home. A financial or mortgage adviser can help you with advice on managing the costs and help you find the right mortgage for your needs.
How much can I borrow as a home mover?
Your borrowing power depends on your individual circumstances. Lenders assess affordability using different criteria, such as your income, outgoings, and deposit level.
Since deposit amounts can vary, getting multiple estate agency valuations early is a smart move.
Most buyers can typically borrow between four and five times their income, though this varies. Some lenders may lend six times the income for specific professions, while others may lend less.
Many lenders offer a range of mortgage options, including fixed-rate, interest-only mortgages and repayment mortgages. Working out a repayment plan can help structure the borrowing in a way that better aligns with your financial goals. A mortgage and protection adviser can help you compare deals, assess affordability, and break down the costs involved.
Outstanding service and clear communication are at the core of what we do. But don’t just take our word for it—read firsthand experiences from our clients and discover why they rate us a 5-star mortgage broker.
What is porting?
Porting is the process of transferring an existing mortgage to a new property when moving home. This allows homeowners to retain their current deal, interest rate, and terms and conditions. This can be beneficial if the deal is better than what’s available on the market.
However, porting depends on the lender’s criteria, and the new property must meet their security requirements. Additional borrowing may not be possible, and early repayment charges may apply if the homeowner decides not to port the mortgage.
Is porting right for me? Pros and cons
Porting your mortgage may seem like a great idea when moving home. However, it’s not always the best option for everyone. Here are some key factors to consider.
Pros of porting
- Retain existing mortgage terms: Keep your current deal and avoid early repayment charges and potential increases in monthly repayments.
- Easier process: Your lender has already assessed your affordability and creditworthiness, making porting easier than applying for a new mortgage.
- Saves money: Porting can help reduce expenses such as arrangement fees, valuation fees and legal costs.
Cons of porting
- Not always possible: Your lender may not allow porting, or the new property may not meet their lending criteria.
- Limited choice: Sticking to your current lender limits your options to switch to a more competitive deal.
- Not always the best deal: A new mortgage could offer more attractive rates or terms, making porting a less cost-effective option.
- Additional borrowing: If you need extra funds for your new property, you may need to apply for additional borrowing, which may incur higher interest rates or fees.
Overall, porting a mortgage can be a smart choice if you’re satisfied with your current mortgage and the new property meets your lender’s criteria. However, it’s essential to compare your options to ensure you’re getting the best deal for your circumstances.
How does home equity affect my options?
Your home equity—the difference between your home’s value and your remaining mortgage—plays a key role in your house move options. Here are some ways equity can impact your move:
- Affordability: More equity can help you afford a more expensive property or reduce your monthly payments on a new mortgage.
- Deposit: Using your equity can allow you to put down a larger deposit, potentially securing better mortgage rates.
- Loan-to-value (LTV) ratio: The LTV ratio is the amount you want to borrow compared to the property value. A lower LTV ratio can increase your mortgage approval chances.
- Selling price: Higher equity can make it easier to sell at competitive prices and potentially negotiate better terms.
Lower equity can limit your options, especially if you need to borrow a large amount. In this case, selling your current home first might be necessary to free up funds for a deposit. Speaking with a mortgage adviser can help you explore the best options based on your credit rating and house prices.
As a UK resident, your compliance with the Prudential Regulation Authority guidelines can also impact your borrowing potential. This includes factors such as affordability assessments, stress testing, and how much you could borrow from mortgage providers.
How can Strive Mortgages help with your home move?
Strive Mortgages offers expert guidance through the entire moving, selling and purchasing process, ensuring a smooth transition. We assist in several ways, including:
- Finding the best mortgage: We can help you find the best mortgage that suits your financial circumstances, monthly payments, and credit file. We’ll compare rates and offers from different lenders and advise you on the best deal.
- Pre-approval: Our brokers can help you get pre-approved, giving you a better idea of what you can afford to buy. This also gives you an advantage in a competitive market, as it shows buyers that you’re capable of purchasing the property.
- Managing the application process: We’ll help manage the mortgage application process, including completing the necessary paperwork and liaising with the lender on your behalf.
- Providing advice on the process: Our brokers offer tailored advice on selling your home and buying a new one. This includes tips on negotiating the sale price and arranging for surveys and other inspections.
- Coordinating with other professionals: We work with other professionals, such as solicitors and estate agents, to ensure that everything runs smoothly.
For more information about home mover mortgages, call us on 0330 043 1121, or get started on your home mover mortgages journey.
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Jamie Elvin
Jamie is an expert in all things mortgages, and our most experienced broker. Connect with Jamie and get started to see how Strive Mortgages can help you.
