Moving House with a Mortgage

Written by Nicola Ryan

2nd Nov 2022 (Last updated on 12th Feb 2024) 9 minute read

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. However, the best one for you will be dependent on a variety of factors. This includes your current mortgage value and the value of your new property among other things. Here are some of your moving house with mortgage options to consider:

Porting your mortgage

The first option you have is porting your mortgage. This is when you transfer your existing mortgage to your new property. Porting your mortgage means that you will be able to avoid some upfront costs when applying for your new loan. However, you may be able to find better mortgage deals when looking elsewhere.

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

If porting your mortgage is not an option, you can take out a new mortgage. This is referred to as a home mover mortgage and is specifically for those moving houses. In order to be accepted for a home mover mortgage, your lender will conduct affordability checks. This is the case even if your financial situation has not changed.

Bear in mind that you will have to pay fees such as arrangement fees and may be subject to exit fees such as early repayment charges.

Borrow More Money

If your new property is more expensive, then you will have to borrow more money. There are multiple ways that you can do this by porting your mortgage.

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 will 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, bear in mind that 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 you’re lending has not increased, the affordability lending criteria will still need to be met.

What Are My Other Options?

If porting your mortgage is not the best option for you, there are other options you can consider. Remortgaging can be cheaper and offer better repayment rates. This is dependent on your financial situation. Here are the remortgaging options you should think about:

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 exit 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. New lenders may be able to offer you a better repayment rate than your current provider. 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 will be costs involved. The total cost you will have to pay depends on how much you still owe on your mortgage and the value of your property among other factors. These costs are based on the UK average house price of £277,000.

Porting Mortgage Costs

The average cost for porting a mortgage is £2,340 plus 1-5% of the mortgage value. Here is a breakdown of the cost:

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 £1,253 plus 1-5% of the mortgage value. Here is a breakdown of the cost:

Remortgage with New Lender Costs

The average cost when you remortgage with a new lender is £3,403 plus 1-5% of the mortgage value. Here is a breakdown of the cost:

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 that 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 when moving to a cheaper property can be ideal. This is especially the case if your financial circumstances have not changed. The reason is that you will need to borrow less money. If you are on a low interest rate, porting a mortgage may be a good decision to consider.

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%.

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

Here are the pros that come with porting a mortgage:

• In most cases, you will not have to pay an early repayment charge or exit fee.
• The application process will be quicker as your mortgage lender will already have your information.
• You should be able to continue paying a low rate of interest if your previous mortgage had a low interest rate.

Porting a Mortgage Disadvantages

Here are the cons that come with porting a mortgage:

• 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

Here are the pros that come with remortgaging:

• You may be able to find a better deal with a new lender.
• You can apply to remortgage to borrow more money for home improvements.
• You may be able to pay off your existing mortgage at a faster rate.

Remortgaging Disadvantages

Here are the cons that come with remortgaging:

• You may be subject to high early repayment charges and exit fees.
• It can take a while to apply because the new lender will not have your information.
• The overall repayment cost will 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 ensure 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.

Do I Have to Change My Mortgage?

You are 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.

What Happens if I am in Negative Equity?

If you are in negative equity, you will have to talk to your mortgage provider before proceeding with any moving plans. Negative equity means that your current mortgage is more than what the house is worth.

Being in negative equity can affect your options which is why it is important to speak to your current mortgage lender and any potential mortgage brokers to discuss 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 to port your mortgage within a certain timeframe. This is usually 30 days.