Home Mover Mortgages

Paul Crisp from Fiducia Mortgage Solutions talks us through mortgages for Home Movers.

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What do we mean by a home mover mortgage?

These are mortgages for people that already have a mortgage but want to move house. They might be upsizing, downsizing, moving for a job or because their family is getting bigger or smaller.

A common situation is where two people have two separate homes and two separate mortgages, are moving in together and buying a property.  Alternatively, people might be going their separate ways and selling one home to buy two properties.

What moving costs need to be considered?

Just like when you bought the house, you will need a deposit. But rather than this being in your bank, it’s probably in your home in the form of equity. This is an important step, to understand how much equity you’ve got.

When you’re selling a home, you will need an estate agent. Their fees do vary depending on the type of agent, but it’s usually a percentage of the sale price – around one percent for example.

You will have solicitors’ fees as part of the search process and legal work. There is also stamp duty to pay – and this is a big cost.

Lenders will often charge a mortgage arrangement fee or product fee. It’s good to compare your current deal against a new one, as you might have penalties to pay to end your current mortgage. It’s always good to get it reviewed.

You will also need to plan for removal costs, which can be expensive if you get a firm in to do it – so some people choose to hire a van and do it themselves. You may also choose to put furniture and possessions in storage, which also involves a cost.

How much can I borrow as a home mover?

It’s difficult to answer this as it will depend entirely on affordability calculations. Whether you’re a home mover, a remortgage client or a First Time Buyer, the lenders have calculators to assess your borrowing. But every lender has a completely different calculator.

It depends how you’re paid, how you’re employed, whether you get overtime and if you receive any benefits. It also depends on the length of the mortgage term – whether it’s 20 years or 25 years, and the type of mortgage: for example a two-year or a five-year fixed rate deal.

The last time you got a mortgage, you may have been told that the borrowing will be your income multiplied by four. It’s not quite the same any more.

If you go to your bank they might offer you £200,000, but a broker might be able to get you £250,000 by shopping around. That could be the difference between getting your forever home or a stopgap purchase.

What is porting?

Porting is where you stay with your current mortgage provider and take the loan with you to your new property. It’s often a good option, especially if you’re tied into a fixed rate period or you’ve got high early repayment penalties.

Porting is often seen as the easy solution to reduce costs and keep things simple.

Can I increase the mortgage value when I port?

Yes, subject to the affordability checks we were just talking about. It’s calculated in the same way. Say your current mortgage is £150,000 and you want to borrow £200,000, the calculators and rules work the same.

Can I port my mortgage if the new home is cheaper?

Yes, but if you’re going to reduce the mortgage total you might have some penalties to pay. The advantage of porting is that you won’t pay any fees, but reducing the mortgage might mean you do pay an early repayment charge.

This is again one of the reasons why you should speak to an advisor. We can look at your current deal and explore whether it would work out better to get a new mortgage or to port your product. As a broker we have to show you the cheapest option – we can’t just sell you a mortgage because it suits us. It’s got to be the best option for you.

How do I decide whether to port or get a new mortgage?

It will completely depend on your situation. If you are tied in with penalty charges and the lender will lend you the amount you need, then porting could be the best option.

But if your current lender won’t allow you to borrow the amount you need, it might be better to pay the penalty and get a new mortgage with somebody else.

A common one is where you have recently gone self-employed and might not meet the criteria for a new mortgage. But you can take your mortgage with you. The best option is to talk to a broker and compare all of the options.

How does the equity in my home affect my options?

In the same way as when you first bought the home, the larger the equity or the deposit, the better the rates that you’re going to get on your next mortgage.

You might be able to cover the costs of moving home – the estate agent, solicitor fees etc, from your equity. A First Time Buyer needs money in the bank, while a home mover just needs money in their home.

How is moving home affected by upsizing, downsizing and negative equity?

No two clients are the same. There could be many reasons why they want to move. It’s understanding the reasons behind it. If you’re upsizing you may want to borrow more and we will look at whether the lender would allow you to do this.

But if you’re downsizing, it’s about finding out if there are any penalties. If you’ve got negative equity, you need to understand how to bridge that gap.

It’s a good idea to get advice before you make any commitment. It’s important to understand that lenders will look at a lot of factors – including how far your new home is from your work. If your commute is going to be over a certain distance or a certain length of time, lenders may be concerned about the extra costs of travelling to work.

How can a broker help?

My role is to give you advice in plain English. There’s so many different options for people moving home. We’ve just got to find the solution that fits to get you that dream house. We help you compare all the different things that are out there.

We will help remind you of the process when moving home. You will probably need an Agreement in Principle to make an offer on a property and we will make sure you get everything in order.

We can help negotiate with estate agents – making sure that you’re getting the most suitable deal when you’re making that offer on the property. And we’re there throughout the process, which can take up to four months. Finally, if you’re upsizing and expanding your finances, it’s good to look at your protection again: life insurance, critical illness cover and income protection. It’s all part of the service that we offer.

Your property may be repossessed if you do not keep up with your mortgage repayments.

Why choose Fiducia Mortgage Solutions?