Last Updated: February 2nd, 2024 at 6:39 pm
Moving home and managing your mortgage simultaneously can be complex. This section answers key FAQs related to moving home mortgages, offering insights into mortgages, porting, and the transition process.
Porting a mortgage is common, allowing you to transfer your existing mortgage to a new property. However, eligibility depends on your lender’s terms and your financial circumstances. It’s essential to confirm with your lender whether your mortgage is portable and understand any associated fees or new terms.
If your new home is more expensive, you may need additional borrowing. This scenario often involves applying for a top-up on your current mortgage or securing a new mortgage for the extra amount needed. The lender will assess your affordability for the additional borrowing, and it may come with different terms or interest rates.
Deciding between getting a new mortgage and porting your existing one involves evaluating your current mortgage terms against the prevailing market conditions. If your current mortgage has favourable terms or significant early repayment charges, porting may be beneficial. Conversely, if better interest rates are available, or if your financial situation has significantly changed, a new mortgage might be more suitable.
Begin by evaluating your financial situation and researching current mortgage rates and products. Consult with a mortgage advisor, like Green Mortgages, who can guide you through options based on your specific circumstances, including whether to port your existing mortgage or apply for a new one. They can also help with the application process, documentation, and liaising with lenders.
You can still port your mortgage to a cheaper home, however depending on the Loan-to-Value of your mortgage against your new property, your lender may insist that a certain chunk of your mortgage is repaid during the process to keep the LTV the same.
Example: You owe £100,000 and your current home is worth £125,000. Your LTV is 80%. You want to sell and port your mortgage with you, to a property worth only £100,000. Your lender won’t agree to borrow you the same £100,000 at 100% LTV, and may require you to reduce your mortgage balance to reduce the LTV to 80% again.
Breaking a fixed-term mortgage can incur early repayment charges, which can be substantial. Consider the cost implications versus the potential benefits of securing a new mortgage at a possibly lower interest rate. Sometimes, porting is a more cost-effective option to avoid these penalties.
To ensure a smooth transition, start planning early. Notify your lender about your move, gather all necessary financial documents, and maintain good communication with your mortgage advisor. Stay updated on the status of your mortgage application and be prepared for any additional information requests. Also, consider the timing of your sale and purchase to avoid a gap in homeownership that could affect your mortgage situation.
If there’s a delay in aligning the sale of your old home with the purchase of the new one, you might need a bridging loan to cover the gap. Otherwise, you may have to pull out of the sale of your own property and start over. Discuss with your lender or mortgage advisor about the feasibility and terms of a bridging loan.
Yes, you can switch mortgage lenders when moving, by paying off your existing provider in full when you sell, and applying for a new mortgage for your purchase. This could be an opportunity to find a better rate or more suitable mortgage product. However, consider any fees associated with exiting your current mortgage and the costs involved in setting up a new one with a different lender.
