Home Movers

Getting a mortgage for a new home

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Getting a mortgage for your new home is similar to getting a mortgage as a first-time buyer, but you are likely to have an existing mortgage and may have a larger deposit this time round. This guide covers moving a mortgage and taking out a new one.

Getting a mortgage for a new home

Looking for a remortgage deal?

Your home may be repossessed if you do not keep up repayments on your mortgage

How does moving house with a mortgage work?

If you’re looking to move house and you already have a mortgage on your current home, you might be able to transfer - or port - your fixed rate, tracker or other mortgage deal to your new home. It’s worth checking your mortgage details to find out.

If porting is possible, you’ll still need to reapply for your mortgage and go through the same affordability and credit checks you went through to get the mortgage. You’ll also have to pay for a valuation, as well as legal fees and stamp duty.

You may find it harder to get approved for the same mortgage if your financial circumstances have changed.

And if you need to increase the size of your loan to get a more expensive house, you’ll also need to meet the lender’s borrowing needs for that extra amount. You may also have to pay a fee for increasing your mortgage amount.

You may decide to take out a new mortgage with a new provider if they’re offering a more competitive deal, but again, you may need to pay early repayment charges and other fees to end your current mortgage deal.

A graphic showing the average loan to value for home movers is lower than the average loan to value for first-time buyers

The average loan to value home movers are looking to take out is lower than first-time buyers, according to UK Finance, 2018.

Should you port your mortgage?

If you are able to port your existing mortgage, but you need to borrow more, you may end up with two mortgages as your existing lender may need you to take out a separate loan to cover the difference. This can mean paying another mortgage arrangement fee and possibly getting locked into a deal that has a less competitive interest rate.

But if you decide to apply for a new mortgage altogether, you may have to pay an early repayment charge to get out of your existing deal early.

For a fixed-rate mortgage, this is typically between 1% and 5% of the mortgage amount you have left to pay, depending on how far into the mortgage term you are – so if you’re in the final year, you’ll pay less than if you were in the first.

Some tracker mortgages will also come with early repayment charges, so it’s a good idea to check with your lender and see if there are any fees to end the deal early.

If you’re on your lender’s standard variable rate – SVR – you’ll be able to move to a new mortgage without paying any early repayment charges. 

A graphic showing the percentage of fixed rate borrowers that are looking to buy a home versus remortgage

37% of homeowners looking for a fixed rate mortgage are looking to purchase a new property, compared to 63% who are looking to remortgage with a fixed rate deal, according to MoneySuperMarket data from January 2016 – July 2018.

Steps to minimise mortgage fees on your new home

If you want to keep costs down, here are a few tips:

  • If you don’t need to increase your borrowing, porting an existing mortgage to a new property through your current mortgage provider can help minimise costs
  • If you are tied into a fixed rate deal and you can delay moving, it’ll be cheaper to wait until your fixed deal has come to an end and you’re on your lender’s SVR as you won’t have to pay any early repayment fees
  • Even if you do have to pay an early repayment fee, you may find the cost is outweighed by switching to a mortgage with a lower interest rate, so it’s important to compare the costs   

Moving to a bigger house with a larger mortgage

If your house has gone up in value since you bought it, you’ll have built up more equity - which could increase your chances of getting a bigger mortgage for a more expensive property.

You’re also more likely to get accepted for a larger mortgage if you’ve had a pay rise or reduced your outgoings, as well as kept up with your existing mortgage repayments.

An image showing that the average deposit amount for a home mover is larger than the deposit for a first-time buyer

People looking to move home have an average deposit of £187,831, compared to first-time buyers’ average deposit of £48,242, according to MoneySuperMarket data from January 2016 – July 2018.

Moving to a cheaper house with a smaller mortgage

If you’re looking to downsize, an increase in the value of your current home could mean that you’ll be able to take out a smaller mortgage and reduce your monthly repayments – provided your personal financial situation hasn’t changed.

If the difference in value is large enough, you may even be able to get a cheaper home mortgage-free.

A map showing the average house prices in the UK for 2016 – 2018

The average prices of houses in the UK for 2016 - 2018, according to UK Finance data.

Moving house with negative equity

If your home is in negative equity - where the current value of the house is worth less than your existing mortgage - it’s best to talk to your mortgage provider before moving forward with any home purchase plans as you may find it harder to get accepted for a new mortgage application.

You may find that you can only move home if you need to move due to a new job or they may be certain restrictions on the type of property you can buy.

When to apply for a mortgage when moving

If you’ve just started thinking about moving, it might be a good idea to speak to your mortgage provider to find out how much money you could borrow if you were to move, and what fees you’d have to pay.

It’s also worth talking to a mortgage broker to help you make your decision – you can phone London & Country for free on 0800 073 2310.

Comparing mortgages when you’re moving home

Comparing mortgage quotes on MoneySuperMarket’s mortgage comparison tool can help you find the best mortgage deal for your new home. Choose “house purchase” from the mortgage type dropdown to compare example mortgage quotes from different providers.   

It can be a good idea to play around with the calculator at the top of the tool so you can get an idea of how much you might be able to afford. You’ll be able to see the monthly mortgage repayments you’d have to make for each deal, and if you click on “Product Details”, you’ll find more information on any extra moving fees you’d have to pay.

The comparison tool doesn’t take into account your financial situation or your credit history, so it’s important to remember that your monthly repayments and deal rates could change when you apply for a mortgage in principle and a mortgage offer.

Your home may be repossessed if you do not keep up repayments on your mortgage

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