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Home Mover Mortgages – your guide to finding the right solution
If you have already bought a house and are now moving to a new home, you will need to get a new mortgage. You may be moving to your dream home or downsizing as your situation changes, but whatever the reason, you want to find the most suitable mortgage possible.
Even though you have already acquired a mortgage before, you will still need to get all the information available because it might be different the second time around. In addition to selling your home, you also have to find the right mortgage option.
Porting your mortgage
When you are selling one home and purchasing another, you have three main financial avenues open to you.
The first is choosing to take your existing mortgage deal to your new property. This is called ‘porting’ your mortgage. It involves reapplying to your existing lender in case of any financial changes, and sometimes asking to borrow more.
Some lenders will only allow this with a new mortgage for the extra amount, and this has fees attached to it. It may also have a higher interest rate than your original deal. It’s essential to get a clear picture of all of these details before committing.
Remortgaging with an existing lender
Another route that is open to you is entirely replacing your existing mortgage deal with a new one from your lender. The first thing to check is if you will be subject to an early repayment fee for leaving your current deal.
This can be up to 5 per cent of the total loan value, so is a significant sum. There may also be a separate exit fee to pay, plus arrangement fees on your new deal. Understanding exactly what you are liable to pay is crucial to making the right decision for you.
Remortgaging with new lender
Of course, you can also choose to go to a completely new lender as well. If you’re in a situation where the value of your home has risen significantly since you purchased it, this may be the better choice. The money you raise with the sale of your property can be used to pay off your existing mortgage. Again, various fees may apply to leaving your current deal or taking on a new one, so a visit to a mortgage broker can be a good way to make sure you make the right decision for you.
How is it affected by upsizing/downsizing/negative equity?
Upsizing will involve showing a lender that you can afford a higher repayment each month. It helps if your current home has gained value, as you may need to borrow less and have better equity. If your wages have increased and your outgoings have gone down, that’s also positive. However, if you’ve struggled with payments in the past, it may be harder.
When downsizing, usually the size of the loan you need will be smaller and affordability less of a concern. It’s possible that you may even be purchasing your new home outright as a cash buyer due to increases in the value of the home you are selling.
The exception to this is where negative equity has occurred. This happens when your home decreases in value after purchase, eroding the stake you own outright. This makes it much harder to secure a new mortgage and you may only be able to secure one if moving for a new job.
How can a Mortgage Broker help?
With so much information to process and lots of options out there, a mortgage broker can help to navigate the deals and rates, and provide qualified advice on your financial position and what deals may represent the best choice for you.
Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.