Did you find yourself having to squeeze family members into your house at Christmas?
Has New Year decluttering made you realise you no longer need all the space you have?
Then maybe it's time to move!
Did you know that you don’t have to go directly to your current mortgage provider?
You also don’t need to use the broker associated with the estate agent. The choice is yours, and our advisers can help guide you through the process of moving home.
Our guide on moving home explains the different options available for getting a new mortgage or porting your existing one.
The mortgage process.
If you are moving to a new home and need a new mortgage, there are various options available to you. However, it's important to check if you have any early repayment charges (ERCs) with your current lender in case you are still in your introductory rate period, which would be charged if you were to switch to a new lender. If you do have ERCs, don't worry – you can still look to move home! You have the choice of moving to a new lender and paying the ERCs, or remaining with the current lender and porting, as we can explain below.
Porting your current mortgage
Your mortgage might be “portable”, which means you can transfer your current mortgage product to a new property. You’ll need to check whether your mortgage is portable and the terms and conditions included in this. We can help you through this process.
The Porting Process
When you look to port your current mortgage, you’ll re-apply to your existing lender for the mortgage. You’ll be able to bring your current product over to the new home, but only for the same balance as you currently have. If you are looking to borrow more, the additional borrowing will be on a new product, based on what’s available at the time. On the flip side, if you are looking to borrow less, this can still be done but you will be charged a pro-rata ERC on the difference.
It is also worth noting that whilst the same amount at the same rate will be ported over, you can amend the mortgage term on this.
There are a few roadblocks that may occur when enquiring about porting your mortgage. Even if it is possible, sometimes your lender won’t allow you to port your mortgage to a new property. There could be a few reasons for this, one being that the lender finds the type of property you want to buy unacceptable. Another is that you effectively have to reapply to borrow to port your mortgage. If your circumstances have changed, you may no longer qualify. A new job, increased outgoings, or recent credit problems could all have an impact on your affordability.
You Might Not Be Able to Borrow More Money
Your lender may have changed their criteria, even if your financial situation is the same as when you took out your first mortgage. You may not be able to borrow the necessary amount and may have to consider using a different lender.
Your current rate is no longer favourable
It may well be the case that the rate you are looking to port is no longer competitive, relative to the current marketplace. Sometimes it can work out in your favour to pay the ERCs and secure a new deal, either with the same lender or elsewhere. This would be dependent on the differential between your current rate and the new one, as well as the amount owed and the ERC applicable.
You Could End Up Borrowing at a Poor Rate of Interest
If you are considering porting your mortgage and need to borrow additional funds, please keep in mind that you are already committed to a lender. This means that you may not have much flexibility in selecting the interest rate for the additional borrowing. The rate offered by your lender may not be the most competitive and could be significantly higher than what other lenders are offering. As a result, you may end up paying a higher rate of interest on the extra borrowing, which can be costly in the long run.
If you are unable to port your mortgage for any reason, or the rate on offer on the current balance and/or any additional borrowing isn’t great, then it is always an option to move lender and to pay the ERCs.
Different lenders have different criteria and calculations so whilst your current lender may not deem it affordable, another lender may well be able to offer more lending to allow you to buy the property. Similarly, your current may not lend on the property, but it’s very possible that another lender will.
Switch to a Different Type of Mortgage Product
Sometimes it’s worth sticking with the same type of mortgage if it’s the best fit for you. However, personal circumstances can change. You may find that a different type of rate or term suits you better now. A mortgage adviser will listen to your situation, explain your options, and help you make a decision you are confident in.
Choosing a different interest rate
When you port your mortgage, you will carry over the deal you have in place at the moment. However, if you aren’t porting you can reassess things and choose from any available products offered by lenders for new borrowing. These can be fixed, variable, tracker, discount, etc. Your mortgage broker will help you choose a product that best suits you and your situation.
How to pay the ERCs?
If you were to move lender and pay the ERCs, these are simply deducted when your current home is sold. You don’t have to find the money at the point of application as your solicitor will include them in the payment to the lender when your property is sold.
We can help guide you through the process of moving home, you don’t need to go to your current lender or use the one associated with the estate agent. The choice is yours! – give us a call on 0800 211 8700 or email us at email@example.com
Your home may be repossessed if you do not keep up repayments on your mortgage.
The information contained within was correct at the time of publication but is subject to change