Moving House
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Moving house is exciting but it can also be a stressful time. Whether you’re moving to your dream home or having to downsize, it’s important to get the right mortgage for you.
How does moving house work if I have a mortgage?
Buying a new home when you’re already a homeowner is a bit different to buying as a first time buyer.
As a homeowner, your deposit is likely to be tied up in your house – it’s your equity. Equity just means the part of the property that you own. For example, if your house is worth £200,000 and you have a mortgage for £150,000, your equity is the £50,000 difference.
When moving house, most people will need to sell their current home to release that equity – that means turning it back into cash, to use as a deposit for a new house.
Your existing mortgage will either move with you (known as porting), or be repaid when the house is sold. Your solicitor would sort this out for you. Bear in mind there may be early repayment charges if you pay your mortgage back, so factor these in when working out what you can afford.
If you have enough equity, it could be possible to move house with no savings.
Do I have to use all the equity as a deposit?
No, you can use as much or as little equity as you like towards the deposit. You can add to it if you have money available from other sources, such as a family gift or savings.
Most people keep some money from the sale of the house to cover costs like solicitor fees and Stamp Duty.
What happens to my mortgage if I want to move house?
In short, when you are moving house, you can either look to move your current mortgage over to a new property (and borrow more from the same lender if needed), or take out a new deal with another lender.
Porting your mortgage
Porting is when you move your existing mortgage to a new property. You get to keep the current rate on your existing balance. If the property you are buying is more expensive and you need to borrow more, any new borrowing will be based on rates available from the same lender at the point of application.
You still need to apply to port your mortgage, meaning you need to pass credit and affordability checks. Not all mortgages are portable, either, so check your mortgage offer or speak to your lender to find out if yours is.
Porting is a great option if you have a low rate that you don’t want to lose, or if you have a big early repayment charge you’d rather not pay. It is important to note that some lenders will still charge if you are downsizing and need to borrow less than you currently owe.
Getting a new mortgage
You might want to consider getting a new mortgage if:
- you aren’t tied into an existing deal
- your current mortgage isn’t portable
- you need to borrow more and your current lender won’t let you
- you don’t pass the credit check with your current lender
- it would make you financially better off
There may be an early repayment charge and exit fees to pay for cancelling your existing mortgage. This can be thousands of pounds, so it’s important to factor that in. Check your mortgage offer or speak to your lender to find out if an early repayment charge or exit fee applies.
Using an experienced mortgage broker can be really beneficial. It could give you access to more products and more lenders, and the broker will do all the research and application paperwork for you. It’s important to review available products with other lenders, not just your current one, so you can be sure you’re getting the right deal for you.
Why The Mortgage Store Chorley?
Exclusive rates you won’t get directly from lenders
A dedicated point of contact from initial enquiry right through to completion and beyond
Appointments seven days a week, to best suit your schedule
Ongoing rate monitoring until completion as standard
What Our Clients Say
Can I move house within a fixed rate period?
Yes, you can.
If your mortgage is portable, you could take your current balance and rate with you to avoid paying an early repayment charge.
If you need to start fresh with another lender, make sure to factor any early repayment charges and exit fees into your calculations.
Can I have two mortgages if I want to move without selling my house?
Yes, potentially. It depends what you intend to do with your current house.
If you are looking to rent it out, you’ll need consent from your existing mortgage lender or a let to buy mortgage. That’s like a buy to let, but is a special type of mortgage that you can get when you’ve previously lived in the house and used it as your home. Typically you need at least 25% equity in the property to qualify. More may be required depending on how much rent the property is likely to generate.
Having family members move in is a little bit different. It’s best to speak to an experienced mortgage broker in this instance.
How do I work out if I can afford to move house?
Moving house is expensive. Do you really want to move, or would renovating work instead? (If the latter, you might want to look at our page on remortgaging for home improvements.)
If you definitely want to move, there are several things you need to look at.
First, how much equity do you have in your house? If you were to sell, would you have enough from the proceeds of sale to put down a deposit on a new house, pay Stamp Duty (if applicable), and cover various fees, such as estate agents and solicitors? If not, do you have savings you could use?
You also need to factor in how much you could potentially borrow on a new mortgage. Would that amount be enough to get you a new home? And, if it is, are you comfortable committing to the mortgage payments?
It’s worth completing a budget planner to better understand your finances. Sit down and really scrutinise your spending. Factor in costs for a new house if you know the location and type of property you want – a four-bed detached house is probably going to cost more to run than a two-bed terraced. Could you cut back on spending in any areas? If you could, are you prepared to?
At The Mortgage Store Chorley, we’re happy to work with you if you’d like a hand figuring out costs.
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What is upsizing?
Upsizing means buying a bigger house than the one you currently have.
If you need to borrow more on a mortgage in order to do this, you’ll have to prove to a lender that you can afford the monthly payments. You should also look closely at your finances to make sure you can afford the living costs associated with the new house.
You should review your insurance policies if your borrowing is increasing.
What is downsizing?
Downsizing means moving to a smaller house than the one you currently have.
You might have a good amount of equity in your current property, meaning you only need a small mortgage. You may even be lucky enough to be able to buy a new property outright!
What is negative equity?
Being in negative equity means owing more than the house is worth. If you sell, proceeds from that sale wouldn’t be enough to repay the debts in full. You would therefore need to find money from another source to make up the difference.
You would also need to find a deposit from elsewhere for a new mortgage.
How can The Mortgage Store Chorley help get a mortgage for moving house?
We understand that moving house is one of the most stressful things you can do.
At The Mortgage Store Chorley, we’ll take as much of that stress away as possible by working to find the right mortgage for your needs. We’ll review any existing mortgages you have and look across our range of lenders to determine the best option available to you. We’ll also conduct a free insurance review to make sure you and your family are properly protected.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
