Whether you’re a mortgage hopeful planning ahead or a mortgage holder planning for relocation, you might have some questions about mortgages and moving house. What options are available to you? Is there anything you need to consider depending on the specifics of your mortgage? Can you move without changing your mortgage at all?
This article explores all these questions and more, aiming to give you a comprehensive idea of your choices and next possible steps.
From ‘porting’ to borrowing more money to cover a price differential (which can be done in one of three ways), keep reading to get informed about whether you should take your mortgage with you when you pack up your current place and head out.
What Are My Mortgage Options When Moving?
Generally speaking, there are three options for the mortgage you’re currently paying off when you decide to move house.
The most popular option is the transfer of your original mortgage to your new home, which is called ‘porting’ – but that’s not the only option. Your specific needs and circumstances put you in the best position to judge your next mortgage move, and you’ll be in the best place to do so once you’ve discovered all three of your choices:
If your current mortgage has a low interest rate and still seems to be a good deal, consider transferring your existing mortgage. ‘Porting’ it over to your new home. This will allow you to avoid some fees and might still work out as simpler and cheaper even if you find better mortgage rates elsewhere.
The most important thing to ask if you’re considering porting your mortgage is whether this is even possible! Is your mortgage portable? If you don’t know offhand, you should be able to find out in your mortgage documents/by asking a broker or lender directly.
As mentioned earlier, porting is the most popular option for homeowners, especially owner-occupants. But as with most things, it has its advantages and disadvantages. These include:
- You CAN avoid early repayment charges
- You WILL already know what you’re required to pay each month, avoiding surprises
- You MAY receive the price difference in cash if you port to a cheaper property
- You MAY need to borrow more money if you’re buying a more expensive property
- You MAY have to pay a fee to increase your loan
- You WILL still need to pass affordability checks
- You WILL still need to cover certain fees, like valuation costs, legal fees and stamp duty
As mentioned in the disadvantages of porting, those looking to move into a more expensive property will need to borrow more money to cover the price difference. There are three options under this umbrella, which are as follows:
- Porting your existing mortgage and increasing it – This is the easiest way to borrow more money and will still leave you with a single repayment to handle each month rather than complicating your financial outgoings. Be aware, however, that while your lender might agree to you porting and increasing, they won’t always offer you the best rates if you do.
- Porting your existing mortgage and taking out an additional mortgage to cover the additional amount – Your lender might ask that you take out a separate home loan to cover the price difference. This means handling a second mortgage arrangement fee, but it will sometimes be your best option from a financial standpoint, despite the extra admin.
- Paying off your existing mortgage and getting a new one – If mortgage rates have fallen since you locked yourself in and you feel you could get a far better deal if you left your current mortgage behind, this could be your best option. Make sure you factor in things like ERCs (early redemption charges) and shop around to find the best value before you commit.
Getting a Home Mover Mortgage
As you research moving with a mortgage, you may come across the term ‘home mover mortgage’. A home mover mortgage is, in fact, a standard mortgage – it’s just a mortgage that’s available for the house you’re moving into (while your previous mortgage might not have been). If you can’t port your mortgage, you’ll need to pay it off and get a home mover mortgage instead.
As with the first time you were approved for a mortgage, you’ll need to prove you can afford the new home loan, pay any fees that crop up, and cover any ERCs associated with your previous mortgage.
Can I Move Without Changing my Mortgage?
This is the definition of a frequently asked question, so though we’ve already covered it above, we want to make it crystal clear: Yes, if your mortgage is portable and the home that you’re moving into is the same price as (or cheaper than) your current home.
It’s a little less straightforward if the home is more expensive, as you’ll need to up your mortgage or create a separate arrangement at minimum to cover the difference.
It’s also less straightforward if you don’t have a portable mortgage, as you could face a sizeable fine depending on the terms of your mortgage contract. This type of fine is usually made up of exit fees and early repayment charges and might give a homeowner pause about deciding to move in the first place.
Where Do I Go From Here?
Having taken in the above information, you’re hopefully deciding on your best route forward and beginning to question your next steps. Knowledge is power, and we recommend gathering as much information as possible before 100% committing to a particular route.
If you’re looking for support with this decision, don’t hesitate to reach out to an expert. Advice from a professional can allow you to move forward with confidence and calm.
Please don’t hesitate to contact a member of the team to find out more about the topics covered.