Moving home mortgages
Moving home mortgages – how does it work in practice?
Moving house and want to take your mortgage with you? On paper, the vast majority of mortgages do allow you port your loan arrangements over to a new property. So if you’re thinking about moving home, in theory you should be able to take your existing mortgage with you to your new property. However, it’s not always that simple.
Since the credit crunch, many lenders have been considerably more cautious about moving home mortgages.
Even if you only need the same mortgage amount to move to your new property, your lender may take the opportunity to look again at your personal circumstances, to ensure nothing has changed which may impact your affordability. For example, has your family expanded? Have you become self-employed? Lenders may see those changes as warning signs that you may no longer be able to afford your loan. It might even be that the lender’s criteria has changed since you last applied, and you are no longer eligible.
In those situations, your lender may well refuse to let you move your loan to the new property. That means you either need to stay where you are, or look for a new lender.
Finding a new mortgage
But don’t despair, as this could be a golden opportunity. Chances are, interest rates are a lot lower than they were last time you moved, so shopping around for a better mortgage deal may not be a bad thing.
However, unfair as it may seem, if you are forced to leave your existing deal before the due date, you may have to pay out early repayment fees.
Topping up your mortgage
If, like the majority of homeowners, you’re looking to move up the property ladder when you move home, you may need to borrow more money on top of your existing mortgage. In this situation, your mortgage lender will look carefully at your income and outgoings to assess your affordability for the increased loan.
However, if you have maintained a good credit score, and kept up with your monthly mortgage payments, your track record will work in your favour, particularly if you have built up a bigger deposit in your home over the years.
You will more than likely have to pay an arrangement fee for the mortgage ‘top-up’, and you should be aware that any further borrowing may be charged at a different rate of interest to your existing loan. There may also be a new tie-in period relating to your additional borrowing, which could tie you in to your mortgage for longer than you anticipated.
Moving home and packing up your mortgage to take with you isn’t always as simple as it sounds, but it needn’t be a headache either.
