When moving house with a mortgage, there are multiple options available such as porting and remortgaging. However, there are advantages and disadvantages to all options.
In this guide, we’ll be taking you through all of the scenarios you need to know about when moving home with a mortgage. Whether you are moving to a more expensive property, or you don’t have much left to repay on your mortgage, we’ll look at the various options available.
Can I Transfer My Mortgage When Moving?
There is a range of options that are available when it comes to transferring your mortgage when moving. The right option will depend on your circumstances, including your current mortgage and the value of the new property. Here are some of your moving house with mortgage options to consider:
Porting Your Mortgage
This is when you transfer your existing mortgage to your new property. Porting a mortgage means that you could avoid some upfront costs when applying for your new loan.
Your lender will conduct affordability and credit checks to ensure that you are able to afford the repayments. If your financial situation has changed, you may not be able to port your mortgage.
Home Mover Mortgage
This is specifically for those moving houses, with your lender conducting affordability checks to accept you. This is the case even if your financial situation has not changed.
Keep in mind that you may have to pay fees such as arrangement fees and early repayment charges.
Borrow More Money
If your new property is more expensive, then you may have to borrow more money. The easiest method is by porting your current mortgage and increasing it. This method allows you to make a single payment each month. It can sometimes prevent you from having to make arrangement fees or early repayment charges. However, this is not guaranteed to give you the best rates.
You could also choose to take out an additional mortgage on top of your current mortgage. You will still have to port your existing mortgage but also add on a new mortgage that covers the added mortgage amount. This means that you will have two mortgages which are two separate payments.
Am I Allowed to Port My Mortgage?
Your financial circumstance can determine whether you can port your mortgage. Porting can be a cheaper option if you are purchasing a property that is cheaper than the one that you own. Remortgaging a property that is cheaper tends to come with heftier fees when there is a smaller amount of mortgage left to repay. However, this is not always the case and is dependent on your mortgage and lender.
Your lender will conduct an affordability check. Even if you decide to port your mortgage with your current lender, there is no guarantee that it will be accepted. Even if your lending has not increased, the affordability lending criteria will still need to be met.
Compare Mortgage Brokers
Accredited mortgage brokers
Used by over 1.5 million movers in the UK
What Are My Other Options?
If porting your mortgage is not the best option for you, there are other options you can consider. Depending on your lender and financial situation, remortgaging may result in different rates and terms. Here are the remortgaging options you may consider:
Remortgage with your Current Lender
Remortgaging with your current lender is known as a product transfer. This means that you can take out a new loan under your current provider. You may be subject to higher repayment rates if you remortgage with your current lender. However, the upfront costs tend to be lower on average.
If you are remortgaging before your current mortgage term ends, you may have to pay fees such as an early repayment charge. This tends to be between 1-5% of your mortgage value and is dependent on your provider.
Remortgage with a New Lender
You can also choose to remortgage with a new lender. Some new lenders may offer different interest rates, which could vary depending on your circumstances. However, there tends to be a higher upfront cost.
If you decide to remortgage before your mortgage term ends, you may have to pay an array of exit fees including early repayment charges. You may also have to pay other fees such as a valuation fee and arrangement fee.
How Much Will It Cost to Move My Mortgage?
Whether you port your mortgage or remortgage your property, there is likely to be costs involved. The total cost you may have to pay depends on how much you still owe on your mortgage, the terms of your lender and the value of your property among other factors. These costs are based on the UK average house price of £292,000 and includes some costs which may apply.
Porting Mortgage Costs
The average cost for porting a mortgage is £906 plus 1-5% of the mortgage value. Here is a breakdown of the cost:
| Fee | Cost (£) |
|---|---|
| Solicitor fees | £454 |
| Early repayment charge (ERC) | 1-5% of mortgage value |
| Valuation survey | £452 |
| Total | £906 plus 1-5% of the mortgage value |
Remortgage with Current Lender Costs
When you remortgage with your current lender, it is known as a product transfer. The average cost for a product transfer is £1,500 plus 1-5% of mortgage value.
| Fee | Cost |
|---|---|
| Arrangement fee | £1,000-£2,000 |
| ERC | 1-5% of mortgage value |
| Total | £1,500 plus 1-5% of mortgage value |
Remortgage with New Lender Costs
The average cost when you remortgage with a new lender is £2,294 plus 1-5% of the mortgage value. Here is a breakdown of the cost:
| Fee | Cost (£) |
|---|---|
| Solicitor fees | £454 |
| ERC | 1-5% of mortgage value |
| Admin fee | £50-£300 |
| Exit fee | £50-£65 |
| Mortgage broker fee | £300-£600 |
| Total | £1,137 plus 1-5% of the mortgage value |
*Data taken from Uswitch, Natwest and Compare My Move research
Compare Mortgage Brokers
Accredited mortgage brokers
Used by over 1.5 million movers in the UK
Can I Sell My Home Before the End of My Mortgage Term?
You can sell your home at any point, even before the end of your mortgage term, provided you can afford to do so. If you are selling your property, you must ensure that the property sells for a higher amount than your current mortgage loan. Bear in mind that there may be financial penalties if you are looking to sell before the end of your mortgage term.
Although you can sell your property at any time, there may be times when selling is not a good idea. For example, if you are in negative equity, selling your property may not be a financially viable option. This is because your home will now be worth less compared to the value when you purchased the property. Another instance when selling a property may not be a good idea is during a recession.
What Happens When Porting a Mortgage to a Cheaper House?
Porting a mortgage to a cheaper home is sometimes preferred by homeowners with minimal financial changes, as it may mean borrowing less. Some homeowners consider porting their mortgage if their interest rate is competitive and their financial situation remains unchanged.
However, bear in mind that you may have to pay an early repayment charge if you port your mortgage before the mortgage term has ended. The early repayment charge differs depending on your lender but tends to sit between 1% and 5%.
Compare Mortgage Brokers
Accredited mortgage brokers
Used by over 1.5 million movers in the UK
Porting a Mortgage vs Remortgaging
One of the big decisions you will need to make is whether to port your mortgage or remortgage your property. There are pros and cons to each option which are influenced by various factors. These include your current financial situation and the value of the property among other things.
Porting a Mortgage Advantages
- You might not have to pay an early repayment charge or exit fee
- The application process may be quicker as your mortgage lender will already have your information
- You might continue with a low rate of interest if your previous mortgage had a low interest rate
Porting a Mortgage Disadvantages
- You may not be able to port your mortgage
- You may be subject to additional fees such as arrangement fees, legal fees, and mortgage valuation fees
- There may be better deals with other lenders that you are missing out on
Remortgaging Advantages
- You may be able to find a better deal with a new lender
- You may be able to apply for a remortgage to raise additional funds for home improvements
- Some remortgage deals may offer shorter terms, depending on the lender and borrower eligibility
Remortgaging Disadvantages
- You may be subject to high early repayment charges and exit fees
- It may take a while to apply because the new lender will not have your information
- The overall repayment cost might be higher
Can I Arrange a Larger Mortgage?
A larger mortgage may be needed for those looking to buy a property that is more expensive. If this is the case, your mortgage lender will require that you meet their criteria before agreeing to lend you the money.
Charges may apply when arranging a larger mortgage as you will have to arrange a new mortgage.
Compare Mortgage Brokers
Accredited mortgage brokers
Used by over 1.5 million movers in the UK
Do I Have to Change My Mortgage?
You may be able to move house without changing your mortgage if the mortgage you have is portable. If you want to move house without changing your mortgage, your lender will conduct a thorough check to ensure that the valuation of the property and your financial situation are still in good standing.
If your new home is worth a similar amount to your current mortgage, moving house without changing the mortgage is an easier process. In some instances, you may be allowed to borrow more money, increasing your mortgage.
Can Equity Be Used as a Deposit When Moving House?
Equity can usually be used as a deposit when moving house. This is often an option used when the house has increased in value and a large portion of the mortgage has been paid off. The more mortgage you pay, the more equity you build. In this instance, the equity is the money that you would receive once the house is sold and the mortgage is settled.
Compare Mortgage Brokers
Accredited mortgage brokers
Used by over 1.5 million movers in the UK
What Happens if I am in Negative Equity?
If you are in negative equity, it's a good idea to speak with your mortgage provider to discuss your options before proceeding with any moving plans. Negative equity means that your current mortgage is more than what the house is worth.
Some homeowners in negative equity choose to speak to their mortgage provider or find a mortgage broker to understand their options.
Do I Have to Move Straightaway?
If you don’t want to move immediately, it’s important to make this clear with your current and new mortgage providers. This will prevent any confusion and financial penalties from being incurred. Some lenders may allow you to port your mortgage within a certain timeframe, which is usually 30 days.
