Home Mover Mortgages
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Home Mover Mortgage
Lewie Jamieson and Rupert Wells talk about home mover mortgages.
What do we mean by home mover mortgages?
Essentially, these are mortgages for an existing homeowner who is thinking about relocating to a new area, and or finding a larger (or smaller) property. It’s effectively going from one home to the next.
What moving costs need to be considered?
There’s probably more to it than people first think. When you’re moving home you need to consider the cost of selling your existing property, which will include the estate agent’s commission plus VAT. There will also be some legal fees that the solicitor will impose on the sale.
Then when you’re looking at what to buy, you need to be thinking about how much you need to set aside for the deposit, removal fees and possibly a survey valuation fee on the property that you’re buying, depending on its age or condition or whether it’s had any extensive work done on it.
You might need to think about a product fee that comes with the mortgage, and ultimately the biggest fee for most people will be the stamp duty. Depending on the purchase price, this could be zero at the moment on a property worth under £250,000 for a home mover. It’s a 5% fee from £250,000 to £925,000 and then 10% up to £1.5 million [correct at the time of recording in February 2023].
At the end, you need to look at what insurances you might need and whether you want to protect the mortgage on the new property. That’s something that we help clients look at and budget for here at JXP.
How much can I borrow as a home mover?
Historically, we would look at income multiples for a mortgage. If you talk to people that moved 10, 20 or 30 years ago, calculating your borrowing was a very simple multiplication process. Now, many more factors come into how much you can borrow. It can be dependent on the lender we choose and the type of product, such as whether it’s a longer term fixed rate or shorter term deal.
The overall term of the mortgage will have an impact too, as will your age, how many children you have and whether you have any debt in the background. Some debt may be paid off, some may not. Your level of income and the type of income is also important – whether it’s a basic salary, whether you have income from commission, car allowances, London weighting… things like that.
Your borrowing can also depend on the Loan to Value – which is the size of your mortgage against the total property price. It can even come down to the property type and the deposit you will put down.
So there’s a lot more to it now, and every lender uses a unique affordability calculation. A broker can give you a better understanding of how much you can borrow because it can vary so much.
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We’ve got customers all over the country, as we can deal with you over the phone, online on teams. So you don’t have to be based in the Sussex region to use us. We have access to the whole of the market and we’ll happily chat to you wherever you are.
What is porting?
Porting is where you are applying to take your existing mortgage to the new property you wish to purchase. It’s a transfer of mortgage from home to home.
Can I increase the mortgage value when I port?
In most instances where people are looking to port, they are looking to buy larger property. They often need to borrow a larger amount which again is dependent on your circumstances.
If, for example, someone owes £200,000 on their home at the moment but needs an additional £50,000 to make the purchase work, and they fit all the criteria and affordability, that is quite possible.
Can I port my mortgage if the new home is cheaper?
You can, but if you are lowering the loan amount there could potentially be early repayment charges. These would be due on the difference between what you owe now and what your new mortgage amount would be.
But that’s where we come in as advisors. We’d explain the implications of doing so – but yes, it is possible to port a mortgage to a cheaper property.
How do I decide whether to port or get a new mortgage? Is porting worth it?
Porting can definitely be worth it, because in most instances if you were to come away from your existing fixed rate mortgage there’ll be a penalty charge attached to it. By porting you will avoid that penalty charge by taking the mortgage to the new home with you.
In terms of how to decide whether to port a mortgage, that’s where the advice of an advisor comes in. Once we have all the facts and figures on what you would like to do, our first port call is your current lender.
In some instances, porting won’t work out. Although you’re an existing customer of that lender, it’s treated as a brand new application. You have to fit all the criteria at that time and we do encounter situations where the client’s requirements mean they have to come away from that lender and pay the penalty charge.
Your adviser will break down the options and clarify the most appropriate approach to achieve your goals.
How does the equity in my home affect my options?
Your equity is the amount of money you’ve got to play with after the sale of the house. After paying the costs associated with a sale, the remainder can be used as your deposit on the onward purchase. That will have an impact on the Loan to Value, so the more deposit you have against the price of the property, the lower the Loan to Value.
It’ll also determine whether you were able to cover all the fees from the sale and the purchase or whether you need to look at other sources like savings or help from family to cover these.
What else do we need to consider when moving house?
Working with a good mortgage broker makes moving home much simpler. First, you are getting qualified advice, whether that be about the mortgage or protection insurance. Getting qualified, specific advice that’s tailored to you is probably more important now than it’s ever been.
With a whole of market mortgage adviser you have access to more than 100 lenders with over 14,000 mortgage products. That’s far more than any client can ever find direct or by walking into their own bank.
We’re really proud that we look after our clients for a long time, building relationships with them and talking about their future plans – again, that’s not something you’ll get buying direct or walking into a bank. We will talk to people about their aspirations and things that will affect our advice and recommendations to that particular client.
We’ll constantly keep people updated with changes in the market and new, improved products coming out. You’re being looked after far more than you would be elsewhere.
Your home may be repossessed if you do not keep up with your mortgage repayments.