Jamie Elvin talks all about mortgages for home movers.
What do we mean by a home mover mortgage?
A home mover mortgage is a type of mortgage designed for people who are moving home and need to take out a new mortgage to purchase their next property.
Home mover mortgages are typically offered by banks, building societies, and other lenders. They work in a similar way to other types of mortgages, 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” your mortgage, and it can be a good option if you have a competitive interest rate and don’t want to incur any early repayment charges.
What is the process when moving home?
Here are the general steps involved in selling a home and buying a new one:
- Determine your budget: Before you start looking for a new home, you need to know how much you can afford. This will depend on factors like your income, credit score, and existing debt. You will need to secure an agreement in principle to ensure you have the ability to buy, even if you are porting.
- Find an estate agent: A good real estate agent can help you find the right property, negotiate the sale, and guide you through the entire process.
- Get your home ready to sell: You’ll need to prepare your home for sale, which may include repairs, decluttering, and staging.
- List your home for sale: Your agent will list your home for sale and arrange viewings for potential buyers.
- Accept an offer: Once you receive an offer on your home, you’ll need to decide whether to accept it, reject it, or negotiate the terms.
- Arrange financing: If you need a mortgage to buy your new home, you’ll need to apply for financing and get approved before you can make an offer.
- Find a new home: With the help of your real estate agent, you’ll start looking for a new home that meets your needs and budget.
- Make an offer: Once you find the right property, you’ll make an offer to buy it, which will include a deposit and conditions like a home inspection.
- Close the sale: If your offer is accepted, you’ll need to complete the sale, which includes transferring ownership of your old home and obtaining a new mortgage for your new home.
- Move: Finally, you’ll need to arrange for the physical move, including packing, hiring movers, and setting up utilities at your new home.
What moving costs need to be considered?
There are several costs to consider when moving home in the UK, some of which can be significant. Here are some of the main costs to be aware of:
Deposit
When buying a new property, you will usually need to pay a deposit which is typically a minimum of 5% of the purchase price, however the amount required can vary significantly depending on the lenders’ criteria and your affordability.
Mortgage arrangement fees
Some lenders charge arrangement fees for setting up a mortgage, which can range from a few hundred to several thousand pounds.
Valuation fees
Lenders may also charge a fee for valuing the property you are purchasing, which can range from a few hundred to a thousand pounds.
Surveys
A survey can give you a more detailed understanding of the condition of the property you are buying, and can help identify any potential issues or defects that may need to be addressed.
Legal fees
You will need to pay for the services of a solicitor or conveyancer to handle the legal aspects of buying and selling a property. Legal fees can vary depending on the complexity of the transaction and the services required.
Stamp duty
Stamp duty is a tax paid to the government on property purchases above a certain threshold. The amount of stamp duty you pay will depend on the value of the property 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 move your belongings to your new home.
It’s important to budget carefully for these costs when planning to move home, and we always recommend you speak to a financial advisor or mortgage broker who can provide you with advice on managing the costs and helping you find the most suitable mortgage product for your needs.
How much can I borrow as a home mover?
It will depend on your own individual needs and circumstances. Lenders’ criteria and affordability models vary enormously. The main factors are your income and your outgoings, plus the level of deposit you’ve got also plays a big part.
That deposit level isn’t always known, and it’s a big factor in how much you can borrow. It makes sense to get multiple estate agency valuations as soon as you think you’re ready to move.
As a general rule of thumb, lenders will typically offer you between four and five times your income – but again, that can vary enormously. Some lenders will consider six times income for certain professions, but it can be considerably below four times too, so speak to a broker to get a better idea.
Speak To an Expert
Whether you’ve just had an offer accepted on a property and you’re ready to go, or you’re simply wondering how much you need to save for a deposit, it’s never too soon to reach out.
What is porting?
Porting is the process of transferring an existing mortgage from one property to another when moving home. This allows homeowners to keep their existing mortgage deal, interest rate, and terms and conditions, which can be beneficial if the deal is better than what is currently available on the market.
However, porting is subject to the lender’s criteria and the new property must be suitable security for the existing mortgage. 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 a mortgage refers to transferring your current mortgage to a new property when you move home. Here are some pros and cons of porting:
Pros of porting
- Retain existing mortgage terms: If you’re happy with your current mortgage deal, porting allows you to keep the same terms and avoid any early repayment charges.
- Easier process: Porting can be simpler than applying for a new mortgage, as your lender has already assessed your affordability and creditworthiness.
- Saves money: Porting may save you money on arrangement fees, valuation fees and legal fees.
Cons of porting
- Not always possible: Your lender may not allow you to port your mortgage, or the new property may not meet their lending criteria.
- Limited choice: Porting your mortgage ties you to your current lender, limiting your options to switch to a more competitive mortgage deal.
- Not always the best deal: You may find that a new mortgage deal offers more attractive rates or terms than your current mortgage, which means porting may not be the most cost-effective option.
- Additional borrowing: If you need to borrow more to purchase your new property, you may need to apply for additional borrowing on top of your existing mortgage, which may incur higher interest rates or fees.
Overall, porting a mortgage can be a good option if you’re happy with your current mortgage deal and the new property meets your lender’s criteria. However, it’s important to weigh up the pros and cons and compare your options to ensure you’re getting the best deal for your circumstances.
How does the equity in my home affect my options?
The amount of equity you have in your home can affect your house move options in several ways. Equity is the difference between the value of your home and the amount of mortgage you owe on it. Here are some ways equity can impact your move:
- Affordability: If you have a significant amount of equity, it can help you afford a more expensive property or reduce your mortgage payments on the new property.
- Deposit: If you’re using the equity in your current home as a deposit for your new home, having more equity can allow you to put down a larger deposit, which can help you get better mortgage rates.
- LTV ratio: The loan-to-value (LTV) ratio is the amount you want to borrow compared to the value of the property. Having more equity can lower your LTV ratio, which can make it easier to get approved for a mortgage.
- Selling price: If you’re selling your home, having more equity can make it easier to sell at a higher price and potentially negotiate better terms.
However, having too little equity can limit your options, especially if you’re looking to borrow a large amount for a new property. In this case, you may need to sell your current home first to free up the equity needed for a deposit. It’s important to speak with a financial advisor or mortgage broker to understand how your equity will impact your move options.
How can Strive Mortgages help with your home move?
A mortgage broker like Strive Mortgages can help with the whole moving sale and purchase process in several ways, including:
- Finding the best mortgage deal: They can help you find the best mortgage deal that suits your financial circumstances and requirements. They can compare the rates and offers from different lenders and advise you on the best deal for your specific needs.
- Pre-approval: Before you start looking for a new property, a mortgage broker can help you get pre-approved for a mortgage, which can give you a better idea of what you can afford to buy.
- Managing the application process: Once you have found the right property and made an offer, a mortgage broker can help manage the application process, including completing the necessary paperwork and liaising with the lender on your behalf.
- Providing advice on the process: A mortgage broker can also provide advice on the process of selling your existing property and buying a new one, including tips on negotiating the sale price and arranging for surveys and other inspections.
- Coordinating with other professionals: A mortgage broker can work with other professionals involved in the process, such as solicitors and estate agents, to ensure that everything runs smoothly.
For more information on home mover mortgages, please contact a member of the Strive team, by emailing info@strivemortgages.co.uk or call us on 01273 002697.
Your home may be repossessed if you do not keep up with your mortgage repayments.