MORTGAGES
Home Mover Mortgage
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Home Mover Mortgage
Moving home seems relatively straightforward enough to do. Along with moving house, many people think that you have to move your mortgage too. But this doesn’t have to be the case. In this situation, a home mover mortgage might be the perfect option for you. But what is a home mover mortgage, and how can it help?
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What is a home mover mortgage?
Also known as a ported mortgage. A home mover mortgage is when you take your existing mortgage to a new property. You may think it is just transferring it from one property to another. However, you are actually porting a mortgage across. You are porting your interest rate and your terms and conditions too.
The way that a home mover mortgage works is that you sell your existing property and use the money that you have raised to pay off the old mortgage that you had taken out. You then take out precisely the same deal on the new property.
You may think that it is just the same as reapplying for a mortgage with your lender. However, it is more than this.
One of the main reasons that someone will decide to take out a ported mortgage is because they want to move home, but they do not want to be charged any early repayment fees.
Can you port all mortgages?
Whilst many lenders can port your mortgage, you do need to check this out with them. Not only may it not be something that they offer, but they will want to do all the regular checks on you. When you apply for a ported mortgage, you are reapplying. This means that all the affordability checks that you usually have will need to be carried out.
That said, you will be able to show the lender that you have been responsible when it comes to paying back the mortgage. As you will have been with them for some time, and they will know you as a borrower.
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Can I get declined for a ported mortgage?
There is a good chance that you will be approved for your home mover mortgage, but as it is treated just like a new application, there is still a chance that you can be declined. That said, this is rare.
There are several reasons that you might be declined for a ported mortgage.
You have had a change in financial circumstances
Some of the key financial changes that may result in your decline include a reduction in income, a rise in outgoings, increased debts or a dip in your credit rating.
Your property is unmortgageable
Not only will a lender be looking at your financial circumstances, but they will also look at the property that you want to port your mortgage to. They will want to make sure that it is deemed to be mortgageable.
Some of the things that they will be looking for include:
- There is no bathroom or kitchen
- There are issues with the structure
- There are issues with flooding
- There are issues with cladding
- The property is non-standard
Should I take out a home mover mortgage?
Of course, we can’t tell you whether or not you should take out this type of mortgage. We can only guide you in the right direction. Other people have taken out these types of mortgages because they want to move home, but they don’t want to pay the early repayment fees.
However, this is not the only reason why it might be the right idea for you. Some people have found that porting a mortgage is much easier than applying for a brand new mortgage completely. You are still borrowing from your current lender, which means that most of the information they need about you is already there.
Of course, you are looking to buy a new property. So, whilst you might not need to share as much about yourself, you will still need to make sure that the lender has all the information they need about the property you intend to buy.
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Is there anything that I should keep in mind?
It makes sense to port a mortgage. However, the truth is that it isn’t always the best idea. Some issues can crop up along the way. One fact to consider is that a ported mortgage can be limiting you to the interest rate and terms that you are already signed up to.
This might not seem so bad, but if the interest rates are changing around, then this can mean that you end up spending out more money in the long-term. Rather than finding yourself a better rate. As you would do if you shopped around when applying for a brand new mortgage from a brand new lender.
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FAQ
A mortgage is a loan from a bank or building society that allows you to purchase a property. The loan is repaid over several years with interest dependent on your personal financial situation.
A mortgage can be between one or more people. However, if you do not keep up your repayments, the lender can repossess your property.
All mortgage lenders have their own requirements. The following factors take a part in whether you will be given a mortgage offer, and how much the lender is willing to borrow you:
- Amount you wish to borrow
- Size of your deposit
- Employment status and income
- Credit rating
- Outgoings
- Existing debt
- Your age
- Length of the mortgage term
- Your credit status
- If you are applying solely or jointly
To be accepted by a lender, you need to assure lenders that you can repay your mortgage. One main aspect lender’s look at is your credit report to check your repayment history. Your credit file will include current and existing records on items such as credit cards, loans, overdrafts, mortgages, mobile phone/s, some utility payments and all accounts that have been open in the last 6 years. If your credit report shows arrears, defaults, CCJs, debt management plans or bankruptcy in the past, there are mortgage options available which we can help you with.
To get a mortgage you will need to save a deposit of at least 5%, but the more you save, the better your mortgage rate will be. If you have an existing property you own, you can use the equity in your property for this. Our skilled mortgage advisors can talk and guide you through the benefits and the difference in your monthly payments by increasing your deposit.
As soon as you have found the property you want to buy, our mortgage brokers will evaluate your personal needs and situations and recommend a mortgage product that is right for you. They will compare a wide variety of mortgage quotes, including products that cannot be found on the high street or comparison sites. This guarantees that you get the right deal at a right price.
If you agree to the mortgage product your advisor suggests, you will receive your Agreement in Principle (AIP). This will provide you with an estimated total of how much the lender is willing to borrow you and allows you to put an offer in on your ideal home.
If your offer is accepted, you will need to arrange a solicitor to deal with searches, surveys and contracts, which we can arrange for you. We manage the entire mortgage application process through to completion, liaising with your solicitor and lender to make sure your application is successful.
There are different mortgage options such as a remortgage. In this case we would recommend looking for a new mortgage deal approximately 3 months before your current deal expires. By beginning the mortgage process early it will allow you to prepare ahead of time to compare all the available mortgage products and submit your application. Do not worry if your mortgage is approved early as we will ensure that the completion date corresponds with your current deal’s end date.
A lot of mortgage lenders will lend you up to five times your salary. However, this all depends on several factors including your age, number of dependants and current financial commitments. Lenders will work out how much they will lend you based on what you can reasonably afford each month after you have paid your bills, credit cards, loans etc.
In addition, our mortgage advisers will assess your individual needs and situations to see how much you can realistically borrow before an application or credit search is completed. If you choose to continue with the application, our advisers will understand which mortgage lenders to approach to ensure you get the required loan amount.
In order to buy a property with a mortgage, you will need to save a deposit of at least 5%. However, the more you can save, the better your rate will usually be. There are a few exceptions to this as follows:
- If you already own a home, you can use the equity from your property for the deposit
- If you are a council tenant and are looking to buy your current home under the Right to Buy scheme, most mortgage lenders will now accept your Right to Buy discount as a deposit.
As property prices increase, first time buyers are struggling to save enough money to buy a home. In cases like this the government has therefore introduced ‘Help to Buy’ to allow first time buyers to get on the property ladder.
Our expert mortgage advisors are aware of various mortgage deals available and can help you decide which mortgage deal best fits your needs.
When buying a home, you will need to save enough money to pay for other factors and not just your mortgage deposit. This also includes paying for your mortgage fees, moving costs and legal expenses. We have listed below all the possible purchase and moving expenses you may have to pay, to help you with your budgeting. The exact fees and amount you will pay, is dependent on the value of the property you are buying and your chosen mortgage lender.
Mortgage booking fee: Some mortgage lenders will charge this to secure a fixed-rate or tracker deal.
Cost: £99 – £250
Mortgage arrangement fee: Some mortgage products will incur a mortgage arrangement fee, in addition to the mortgage booking fee. This fee is either paid upfront or added to your mortgage debt. If you chose to add it to your mortgage, the cost will increase over the lifetime of your mortgage.
Cost: £1,000 – £2,000
Telegraphic transfer fee: Needs to be paid to the lender to transfer the amount you are borrowing for the mortgage to the seller’s solicitor.
Cost: £25 – £50
Mortgage broker fee: If you use a mortgage advisor to arrange your mortgage for you, you will need to pay a fee or commission, depending on the value of your mortgage.
Cost: £197- £597. However, this may vary if you need to use a specialist lender
Valuation and survey fees: Charged by the lender to value the property you are buying. The cost varies according to which survey you choose:
Home condition survey: Most basic and cheapest of all the surveys and often used for new-builds.
Cost: £250
Homebuyer’s report: More in-depth survey, assessing the inside and outside of the property, and also includes a valuation.
Cost: £400
Building survey: A complete survey generally used for older or unconventional properties. Although they are the most expensive, they are certainly worth considering, as it could potentially save you a lot of money if any structural problems are found with the property.
Cost: £600
Higher lending charge: Can be charged by lenders if you borrow most of the value of the property.
Cost: Approximately 1.5% of the amount you borrow
Searches: Your solicitor will arrange for the local authority to check whether there are any issues that could affect the property’s value. The local council can charge a fee for carrying out these searches and may also request that a drains search be done at the same time.
Cost: £250 – £300
Legal costs: You will need to instruct a solicitor to carry out the necessary legal work for you.
Cost: £850 – £1,500 plus VAT
Stamp Duty Land Tax (SDLT): Charged on all purchases of UK land and property over £125,000. However, the amount you will pay is dependent on the purchase price of the property you are looking to buy, and whether you have owned a home before as follows:
First home: First-time buyers are exempt from paying SDLT on the first £300,000 of the purchase price of a property up to the value of £500,000. All purchases in excess of £500,000 will pay the standard stamp duty rates as follows:
- £0 – £300,000: 0%
- £300,001 – £500,000: 5%
Next home: If you are currently or have previously been a homeowner, you usually pay SDLT on increasing portions of the property price:
- £0 – £125,000: 0%
- £125,001 – £250,000: 2%
- £250,001 – £925,000: 5%
- £925,001 – £1.5 million: 10%
- £1.5 million+: 12%
Second property: If you are looking to buy an additional property, you usually have to pay 3% on top of the normal SDLT rates as follows:
- Less than £125,000: 3%
- £125,001 – £250,000: 5%
- £250,001 – £925,000: 8%
- £925,001 – £1.5 million: 13%
- £1.5 million+: 15%
For example, if you buy a next home for £275,000 the SDLT you owe is calculated as follows:
0% on the first £125,000 = £0
2% on the next £125,000 = £2,500
5% on the final £25,000 = £1,250
Total SDLT = £3,750
Information correct as of October 2021 – Source: www.gov.uk/stamp-duty-land-tax
Removal costs: Paid to the removal firm (if you choose to use one) to pack, transport and deliver your possessions to your new home.
Cost: £300 – £600
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