Can you move your mortgage when you move house?

Summary

In this video, expert mortgage broker Adam explains the steps involved in moving your mortgage when buying a new home. He covers the importance of assessing affordability, choosing a reliable estate agent, and understanding how to port your existing mortgage or switch lenders. The process includes reapplying for a new mortgage, potentially adjusting terms, and managing the transition of funds with the help of solicitors. Adam emphasizes the need to carefully assess all options, avoid common mistakes, and ensure the best deal when moving your mortgage from one house to the next.

Takeaways

• 😀 Before moving your mortgage, check your affordability by reviewing income, expenses, and existing loans to determine how much you can borrow.
• 😀 Different lenders have different criteria, so don't assume your current lender will lend you enough for your new home.
• 😀 Choose a good estate agent who can back up their valuation with evidence and market your property well.
• 😀 Once you’ve received an acceptable offer for your current home, you can start seriously looking for a new property and making offers.
• 😀 You can either stay with your current lender or move to a new one when transferring your mortgage to the new property.
• 😀 Porting your mortgage means transferring your current mortgage and potentially borrowing more from the same lender for the new property.
• 😀 Even if you stay with the same lender, it's a new application, and you need to meet the lender’s affordability criteria again.
• 😀 If borrowing more, consider aligning the terms of your new loan with your existing mortgage to avoid future penalties and make switching easier.
• 😀 When applying for a mortgage to move, lenders will consider the existing mortgage and any additional amount you wish to borrow.
• 😀 The lender may offer a different interest rate and loan term on the additional borrowing compared to your existing mortgage.
• 😀 Once the mortgage is approved, solicitors handle the transfer of funds and ensure the mortgage is paid off, finalizing the process.

Q & A

What is the first step when moving house and transferring your mortgage?

The first step is to check your affordability, which involves reviewing your income (salary, bonuses, benefits, etc.) and outgoings (loans, credit cards, childcare costs, etc.) to determine how much you can borrow.

Why is it important to not simply assume that your current lender will offer you the amount you need?

Different lenders have different lending criteria, and some may not offer you enough for your new property purchase. You may need to switch lenders if your current one cannot provide the necessary amount.

How do you choose a good estate agent when selling your property?

Choose an estate agent that offers a balanced fee and a realistic property valuation. Avoid the agent who overvalues your property just to secure your business or the one with the lowest fee, as they may not provide the best service.

What is the process of porting a mortgage, and when is it applicable?

Porting a mortgage means transferring your existing mortgage to a new property. It is applicable when you are staying with the same lender and typically involves borrowing more to move up the property ladder.

Do you need to apply for a new mortgage even if you're staying with the same lender?

Yes, even if you're staying with the same lender, it is often a new mortgage application. The lender will assess your affordability again and may offer different terms or rates.

What does the process of moving your mortgage entail?

The process involves applying for a new mortgage with your current lender (or a new lender), getting an illustration, possibly topping up the loan amount, and completing new terms. If moving to a new lender, the mortgage gets paid off, and a new loan is issued.

What should you consider when choosing a fixed rate or variable rate for your new mortgage?

Consider aligning the term of your new mortgage with the remaining term of your current mortgage, if possible, to maintain flexibility. A new fixed rate or tracker rate can also be chosen based on your financial situation and the lender's available products.

How can you avoid penalties when moving your mortgage to a new lender?

To avoid penalties, aim to synchronize the end dates of your current mortgage rate with the new loan. This way, if you decide to switch lenders later, you won't be tied to a longer term with penalties.

What happens after your mortgage application is accepted?

Once the mortgage application is accepted, the lender will provide an offer. From there, solicitors will manage the legal aspects, paying off your existing mortgage and requesting the new loan to complete the purchase.

How can the term of your new mortgage be adjusted?

You can adjust the term of your new mortgage based on your needs. For example, if you're borrowing more money, you might extend the term to make the repayments more manageable, subject to the lender's criteria.