Home Mover Mortgages – how to find the best deal for you
If you already own a home and are thinking of moving, mortgage lenders consider you a ‘Home Mover’. Getting a mortgage in this situation is often easier than as a First Time Buyer, but there is still a lot to consider.
What does Home Mover mean?
There isn’t a specific type of mortgage for Home Movers, the term really differentiates you from First Time Buyers. The main difference is that you already have a mortgage and now need a new mortgage to buy another home. The new property might be larger, smaller or of similar size.
As with any mortgage, your first step is to find out how much a lender will offer you, and be certain you can comfortably afford the monthly repayments.
What are the options for getting a new mortgage?
The main three ways of finding a suitable new mortgage: porting, remortgaging with your current lender, or mortgaging with a new lender.
Porting your current mortgage
Moving your current mortgage to a new home is called porting. Most mortgages are portable. The process is straightforward if the new property is of the same or a lower value. If you need to borrow more, you might be moved to a higher interest rate on any additional borrowing over the ported amount.
Porting can seem simpler than arranging a new mortgage, but it’s a good idea to compare your lender’s rates and fees against other offers in the marketplace.
Remortgaging with your existing lender
An alternative is to take out a new mortgage with your current lender. They will know your payment history and will be keen to retain you, which might mean you could get good rates. But early repayment fees could apply on your current mortgage, so check the cost of these.
Taking out a mortgage with a new lender
The third option is to explore mortgage deals from other providers. Again, there may be arrangement fees, valuation fees, and an early repayment charge on your existing mortgage. If you can find a good, competitive offer from another bank or building society, the pros could outweigh the cons.
How does the value of the new home affect your mortgage?
There are some differences in how the mortgage process works depending on whether your new home is of greater value, lesser value or you are in a situation where you have negative equity.
Upsizing is where your new property is more expensive than your current one. You sell your current house and use the proceeds to pay off the mortgage. Any amount left over is your equity, and you can use this as the deposit for the new property as well as meet the costs of moving. You then take out a new mortgage on the rest of the value.
When you downsize, you move to a less expensive, often smaller home. It’s a popular choice for older people, seeking to release equity to perhaps increase their retirement fund or help other family members.
Here, you sell the home to pay off any remaining mortgage. The sum left over is yours to spend or invest as you wish. You can still take a smaller mortgage on the new home if required and is affordable. There are more and more mortgages becoming available for those older customers who still require a mortgage to help them buy their next home.
Negative equity is an unpleasant situation for any homeowner. It means that the amount you owe on your mortgage is more than the value of the property. If you were to sell the house, you would still need to repay the full amount outstanding on your mortgage, irrespective of the sale price achieved. As a result, it can be very difficult to get a new mortgage unless you have managed to build some savings or have financial support from your family.
Depending on the specific situation you may still have some options, so seek professional advice.
Top considerations for Home Movers
The most important thing to consider when looking for a new home is the cost of the repayments on your mortgage. Make sure that you can comfortably afford the monthly payments and any associated insurance products required
Finding a competitive mortgage rate is important too. Comparing different deals can save you a considerable amount of money.
You may also find it useful to seek an Agreement in Principle from your chosen lender – this helps smooth the house purchase process, as your offer to a vendor is instantly more credible.
How can a Mortgage Broker help?
Talking to a Mortgage Broker will relieve much of the hassle of moving home. Our mortgage advisers will explore your situation, shortlist the options and help you develop a successful mortgage application. We’ll support you through the whole process, from setting your property budget right through to moving-in day.
We are an appointed representative of PRIMIS Mortgage Network. PRIMIS Mortgage Network is a trading style of Personal Touch Financial Services Ltd which is authorised and regulated by the Financial Conduct Authority.
We have years of experience in helping people move home. Trust us to find you a great value mortgage to suit your needs.