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Mortgages For Home Movers Explained
What is a Home Mover?
The term Home Mover refers to a borrower rather than a type of mortgage, so there are no dedicated ‘Home Mover Mortgages’. A HomeMover is anyone that already has a mortgage and plans to move house.
When you decide to move home, you may not have to change lenders, or even your current mortgage, but you do have the option to change both, if it benefits you.
What is Porting?
If you want to stay on your existing mortgage terms when you move home, most lenders often facilitate this through a process called porting. You will still need to complete a mortgage application, pay valuation fees and stamp duty, when you choose to port your mortgage to a new home.
In addition to your ported mortgage, if your new home is significantly higher in value, some lenders will require you to take out an additional mortgage to cover the added cost. This can work out more expensive than remortgaging, so you should weigh up both options.
Although rare, not all mortgages are portable. If your lender is unable to port your mortgage, you will have no choice other than to remortgage in order to move home.
Remortgaging has the potential to save you a huge amount of money, depending on your circumstances, however, this is rarely the case for a home mover.
Timing is crucial to whether or not you will benefit from remortgaging. For example, those nearing the end of a fixed-rate deal can often save by switching before they are transferred to their lender’s standard variable rate. If you have little or negative equity in your home, however, then remortgaging is unlikely to be an option for you.
It’s important to note that most mortgage terms include early exit fees, which should always be considered prior to remortgaging. Early exit charges can affect how much you’ll benefit from remortgaging, whether you choose to stay with the same lender or try a new one.
Remortgaging with an existing lender
If your current mortgage provider is unable to port your mortgage, you could consider remortgaging with them. Remaining with your current lender, however, will rarely avoid having to pay early repayment charges or any of the other fees involved with remortgaging, such as arrangement and valuation fees.
For most applicants, unless your existing lender can offer an incredibly competitive mortgage rate, you’re unlikely to benefit financially from staying with them.
Remortgaging with a new lender
As the same costs are involved either way, you are more likely to save money by remortgaging with a new lender than your existing provider, as you’ll be able to take advantage of introductory mortgage deals.
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How does the value of your current home affect your options?
Upsizing is moving to a home that is higher in value than your current mortgage. It’s easiest for home movers who have a good amount of equity in their current home. The lower loan to value rate you would need to borrow in order to upsize, therefore increases your chance of acceptance as well as your access to more competitive interest rates.
Downsizing your home gives you the best opportunity to save money when you remortgage. If your new home is lower in value, you can either benefit from lower monthly repayments or a shorter term on your mortgage.
In some cases, it may be possible to purchase your new home outright with the proceeds of the sale of your current home. You could even incorporate any early exit fees into the asking price, to minimise any losses.
Downsizing also increases the chance that your application to remortgage will be accepted if your financial situation hasn’t improved, or has even declined since you took out your original mortgage.
If your home is in negative equity (you owe more than it’s value) then very few lenders will consider a remortgage. Specialist lenders may consider certain extenuating circumstances, such as relocation for work, mortgage advisers can offer further detail on this situation.
How a Mortgage Broker can help find you the best deal?
Considering a remortgage can be stressful, as it’s not always easy to see whether or not you will benefit. Mortgage Brokers can help you to decide whether porting or remortgaging is the best option for your individual circumstances.
They have access to independent mortgage lenders offering specialist deals that are not available directly, which can help ensure that you are choosing not only the right type of mortgage product, but the most suitable lender for you. This can save you money, stress and the potential disappointment of a failed application.
Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.
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