If you are moving up the property ladder, downsizing, or relocating, we have a huge array of options to ensure you get the property of your dreams. One of our experienced mortgage advisors will work with you every step of the way to provide clear and tailored advice – minimising the stress on your road to changing property.
In this section:
It’s certainly doable, and there are a couple of options available under these circumstances. The most expensive avenue would be to pay your current lenders an early repayment charge. This isn’t often considered to be the most appropriate choice, as most lenders will charge a percentage of the mortgage balance to repay the debt early; that figure can often be in the thousands, so it’s only taken if there are no alternatives or a new mortgage is considerably cheaper.
Depending on your current product, however, you may be able to transfer (or port) your deal to your new home. If you are able to port your current mortgage, then you will still need to reapply for your mortgage and go through affordability checks, you will also have to pay for valuation, legal fees and stamp duty.
This is a possibility. The term for when this happens is called ‘porting’. A lender will allow a borrower to retain their current mortgage term, rate and balance (providing it is still affordable and the loan to value ratio isn’t affected by transferring the mortgage to the new home). It is key to remember that the lender will treat this porting process as a fresh mortgage application, so they may reject the request if they feel it isn’t acceptable.
If your financial situation has changed it can be harder to get approved for the same mortgage, especially if you’ve become a contractor since your last mortgage. Things will also change if you need to borrow more money as you will have to meet the lenders affordability for this, which may mean paying a fee. You may choose to take out a new mortgage with a new lender if they’re offering a more competitive deal for you, but you may have to pay an early repayment charge if you’re moving before your deal is up.
Porting a mortgage needs to occur on the same day of completion, otherwise you’ll be required to pay any early repayment charges applicable. Completing the purchase and sale simultaneously is the only way to avoid this, so it’s important that you make the potential penalties clear to your conveyancing firm.
Your mortgage broker (i.e. us at Roots Mortgages) can contact your current lender to begin the application process. As mortgage lenders tend to treat the process as a new mortgage application, you’ll have to provide ID, income, and financial evidence to support your case. We can guide you through the process and can help to manage the application on your behalf from there.
Usually, the lender will require at least a basic valuation to be completed on the property by a surveyor – they’ll usually be a charge for this service, unless the lender states otherwise. Valuation aside, the lender should only charge product fees if additional borrowing is required on a new interest rate, which we get onto in the next FAQ.
It’s common when moving up the property ladder to increase the level of required borrowing to buy a larger property, providing your lender agrees to you borrowing additional funds, which will usually be raised on one of their current range of mortgage products, not added to the mortgage rate you have secured on your existing debt.
If you need a smaller mortgage, it is possible for you to overpay the debt to make this a reality. That said, you should always check with the lender to ensure that this won’t cause any penalty fees. Most preferential mortgage rates have maximum limits to overpay, so the early repayment charge may become payable if you exceed this limit, so you should always check this with your current lender.
It’s common for mortgage lenders to offer you the choice of porting your mortgage or paying off the current debt and starting again. This can be with your current lender or a new one. Sometimes, especially when further borrowing is required, you might find that a different lender to your current one offers preferential terms for the loan you need.
When moving, your ability to secure a mortgage on the new property and the rates you will be offered depends if your new home is dearer or cheaper than your current one.
Upsizing: If you are wanting to move to a more valuable house then you will need to prove to the lender that you can afford the higher rates. The chances of this increase if your current house has risen in value since you bought it, and also if you can reassure your lender that you can afford the repayments, by showing that your salary has increased and/or your outgoings have decreased. However, if you have had problems with keeping up with your previous mortgage repayments you could find it difficult to secure a mortgage for your new property.
Downsizing: Moving to a cheaper home means that the size of the mortgage you need will decrease, so your monthly repayments will fall too. It might be possible for you to buy your new home outright if the value of your current property has increased and the difference in value between your old and new properties is wide enough.
Negative equity: This is the term for where the value of your current property falls below the outstanding balance on the mortgage used to purchase that property. Negative equity is calculated simply by taking the current market value of the property and subtracting the amount remaining on the mortgage. If this is the case, you might find it difficult to secure any type of mortgage for a new home, whilst some lenders will only provide you with a new mortgage if moving is a necessity, for example if you need to relocate for your job.
You have the option to completely replace your current mortgage by taking out an entirely new loan with your current provider. Whilst you might be able to find a better rate this way, you may incur additional costs as a result. To leave your current deal, you will usually have to pay an early repayment charge, which is often between 1% and 5% of the total value of your mortgage, with the proportion you pay will depend on how much time you have left on your current deal. The good news is that the closer you are to the end of your term the less you will have to pay, and if you are on your lenders standard variable rate you likely will not be charged an early repayment fee. One thing to keep in mind is that you could be charged an exit fee on top of an arrangement fee and valuation fee placed on your new mortgage, so in all cases it’s important to check which fees you will have to pay and for how much, and weigh this up against the money you will save through a better rate.
You can find a mortgage for your new home with a different lender and use this to pay off your existing mortgage, or you can also pay for it by selling your home. For some people this is beneficial if house prices in the area have risen significantly since the time you bought your current home. That said, there will often be early repayment charges and exit fees for quitting your existing mortgage mid-term. On top of this there will be arrangement and valuation fees on your new mortgage, so be sure you include these in your calculations when deciding if switching lender is the best move for you.
Your home may be repossessed if you do not keep up repayments on your mortgage.
There may be a fee for mortgage advice. The fee is up to 1% but a typical fee is £650.