What happens to your mortgage when you move home? Let’s look at your options.
You’re ready to move, so you’ll probably be thinking about what to take with you. Should one of those things be your mortgage?
Taking your mortgage with you – known as porting – is an option. Or you could remortgage with your current or a new lender.
As you can probably guess, both come with fees attached. So it’s worth considering either option before you make a decision.
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I’m moving home, what are my mortgage options?
Porting simply means moving your mortgage deal to your next home.
Nowadays, most mortgages are portable so it’s easier to take them with you.
If your new home is the same price as your old home, it could be worth porting your mortgage. You won’t have to pay a higher rate of interest.
But if your new home is more expensive, porting may not be the best option. You may find you need to take out another loan to cover the difference. This means two interest payments.
You may also have to pay an arrangement fee – an administration charge for organising credit – for the second loan.
Find out more about porting your mortgage.
2. Remortgaging with your current lender
Remortgaging means taking out a new or different kind of mortgage. You might choose to do this through your current lender or a different one.
If you remortgage with your current lender, they may be able to provide you with a mortgage deal that has competitive interest rates.
There are some drawbacks, though. If you’re paying off your mortgage early, you might have to fork out for an early repayment fee.
This is usually between one and five percent, depending on how much of your mortgage you have left to pay off.
Fixed rate mortgages usually have a term of fixed interest payments. If you’ve moved from this to a Standard Variable Rate mortgage, you may not have to pay the early repayment fee.
As usual, though, you’ll have to pay an arrangement fee. You also might have to pay a valuation fee if your new property is more expensive.
3. Remortgaging with a new lender
When you remortgage with a new lender, you can use your new mortgage to pay off your existing mortgage. Or you can use the sale price of your property to pay off your existing mortgage.
These are both good options if house prices have risen in your area, as you may end up with more money to play with.
Again, you might see an early repayment charge when you pay off your old mortgage. You might also have to pay more of the usual fees, like arrangement and valuation fees.
Before you accept the deal, make sure you’ve considered all the costs.
What are the benefits of staying with my current lender?
Staying with your lender, whether you’re porting or remortgaging, has its upsides.
If you go with a new lender, you’ll probably have to have another credit check. Which means you might not be approved for a mortgage if your financial circumstances have changed for the worse.
If you’re not borrowing more money, your lender may not insist on doing a credit check. But it’s worth checking, as some lenders can be cautious.
If you remortgage with a new lender you might also have to pay some legal fees too.
For example, a conveyancing fee to sort the legal paperwork that’s required if you’re switching mortgage providers.
Usually you won’t have to pay this if you stick with your current lender. But it’s always worth checking before you decide.
What are the benefits of switching to a new lender?
If you remortgage with a new lender, they’ll need to do a thorough valuation of the home.
If your home has gone up in value, your loan-to-value (LTV) rate will improve. Generally, the lower the LTV, the better the mortgage options. You can read more about LTV in our guide loan to value explained.
A new deal might have more flexible options too, for example, your new mortgage might allow you to pay off your mortgage earlier. This is useful if you get regular pay rises or bonuses.
Also, you’ll have the whole UK mortgage market to choose from, so you can shop around for the best deal.
How can I save money when I move my mortgage?
If you’re on a fixed rate mortgage, it’s worth waiting until you’re on a Standard Variable Rate mortgage as you won’t be charged for early repayments if you leave the deal.
Fixed rate mortgages usually last between two and five years.
How does the value of my new house affect my mortgage?
If you’re downsizing, the size of your loan will decrease and so will your monthly payments. You may even be able to buy the house outright if the home you’re selling has increased in value.
If you’re looking for a bigger home – upsizing – you’ll need to let your lender know how you will cover higher monthly mortgage payments.
For example, you might have had a promotion or reduced your outgoings in some way. Or the home you’re selling might have gone up in value.
If you’re on negative equity – this means that your house has gone down in value since you bought it – you may struggle to get a new mortgage.
But lenders may offer help if you’re having to relocate because of your job.
When should I apply for a mortgage if I’m moving?
You should look at switching your mortgage around three months before your current deal ends. This will give you time to research the best deals and start the application process.
In the three-month window, speak to your lender. They can tell you how much you could expect to pay in fees, as well as interest rates.
Shop around or speak to a mortgage broker too. You might find more competitive interest rates.