Moving home? Here’s what you need to know about mortgages

Personal circumstances can change and you might plan to move sooner than you expected. If you already have a mortgage deal in place on your current home but want to sell and buy another property, read on to find out what your main options are.

You can sell your current home at any time, including before your current mortgage deal expires. So, don’t let your existing mortgage delay plans to move if it’s right for you and your family. Usually, you’ll have two options – to port your current mortgage or apply for a new one.

Porting your current mortgage to a new property

Porting simply means transferring your current mortgage to a new property.

Many mortgages are portable, but you’ll still need to meet your lender’s criteria. Even though you’d be keeping your current mortgage terms, you are effectively reapplying when you ask your lender to port your mortgage. So, if your circumstances have changed or your lender has updated their criteria, you might find you no longer qualify.

Similarly, the lender will also assess the property you want to purchase, including carrying out a valuation.

If you’re eligible, the two key benefits of porting a mortgage are keeping your current interest rate, which might be lower than comparable deals available now, and that you don’t have to pay an early repayment charge.

If the property you want to purchase is more money, you might still be able to port your mortgage and borrow more by:

• Increasing your existing mortgage to cover the additional cost. This could be a valuable option if you currently have favourable mortgage terms, like a lower interest rate.
• Taking out an additional loan. In some cases, you can take out a top-up loan to cover the additional cost of the new property. This could mean you pay a different rate of interest on the extra portion you’ve borrowed, and you might need to pay an arrangement fee.

There’s no guarantee that you’ll be able to port your mortgage and access more money to buy your new home. Lenders will assess a range of criteria, including your ability to meet repayments.

Before you decide to port your mortgage, it may be a good idea to review other deals available on the market. You could find that interest rates have fallen since you took out your existing deal, and porting could cost you more when you consider the long-term cost of borrowing.

Applying for a new mortgage

In some cases, it could be advantageous to take out a new mortgage deal. For example, you might be able to secure a better mortgage deal for you that means the cost of borrowing is lower. Or if your new home is significantly more expensive, porting your current mortgage might not be an option or right for you.

Lenders will assess your affordability, so you may want to take steps to review your credit report and get your finances in order before you apply.

You’ll often need to consider fees if you’re taking out a new mortgage. This is likely to include an early repayment charge for your existing mortgage. This fee is usually calculated as a percentage of your outstanding mortgage balance, so you might want to review your paperwork to understand the size of the potential bill.

In addition, you might also need to pay for arrangement fees, valuation fees, or exit fees when taking out a new mortgage before your current one ends. Spending some time checking the expected costs could help you decide if taking out a new mortgage deal is the right option for you.

Contact us to talk about your mortgage options

If you’d like to understand your mortgage options and how they might affect your outgoings or other factors like flexibility to overpay, please get in touch.

As a mortgage adviser, we can work on your behalf to find a mortgage that suits your needs, and potentially save you money by securing a deal with a lower interest rate. We can also offer guidance during your application to minimise mistakes and delays.

Please note:

This blog is for general information only and does not constitute advice. The information is aimed at retail clients only.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.