How do mortgages work when you move house?
Key takeaways
When buying a new home you need to decide whether to transfer (port) your existing mortgage to a new property or pay it off and take out a new one
Transferring your existing mortgage to a new home means you keep your current interest rate, but be sure to check if your mortgage is portable
If you own your current home outright, the money left from its sale can form all or part of the deposit for your next home. You only need a new mortgage if the new home costs more than your available funds
When it’s time to sell your home, one of the most significant decisions you'll face is what to do with your mortgage.
It's not just about finding a buyer and moving out. You also need to figure out the financial implications of transferring your mortgage to a new property or settling it and starting fresh.
This decision can be complex, with various factors influencing the best course of action. It's not just about the numbers; it's about your future plans, current financial situation, and the terms of your existing mortgage.
What are my mortgage options when moving home?
When you move home, there are two main options available when it comes to your mortgage:
You can transfer, or 'port', your mortgage to a new home. This can be a smart move, especially if you're currently benefiting from a low-interest-rate deal.
Alternatively, you can pay off your old mortgage and take out a new one. This could be the case if you're moving to a significantly more expensive property or if you want to take advantage of a better mortgage deal.
Porting your mortgage to a new home
One of the main benefits of porting your mortgage is the potential to keep your existing low-interest rate, which can save you from the fees associated with taking out a new loan. However, not all mortgages are portable, so it's crucial to check the details of your mortgage agreement.
If you're unsure whether your mortgage is portable, consult your mortgage documents or speak with a broker. They can help you understand the terms of your mortgage and whether porting is an option for you.
If your mortgage isn't portable, you'll need to apply for a new mortgage when you buy a new house. This process involves reapplying and undergoing various checks, and you may need to pay for a property valuation and arrangement fee, as well as the legal fees, survey , and, possibly, stamp duty that come with a house purchase.
Keep in mind that changes in your financial circumstances since you took out your original mortgage could affect your approval for porting. If porting isn't possible, you'll need to consider getting a home mover mortgage.
When applying for a new mortgage, lenders will perform credit and affordability checks to ensure you can manage the loan. Be aware that you may face early redemption charges if you're paying off your existing mortgage before the end of your deal period.
How can I borrow more money?
If you're moving to a more expensive property, you might need to borrow additional funds, and potentially pay higher mortgage payments. Here are three options for borrowing more money:
Increase your existing mortgage – You can ask your current lender if you can borrow more on your existing mortgage. You may be able to do this via online or mobile banking.
Port your mortgage and take out an additional loan – If your mortgage is portable, you can transfer it and apply for a top-up loan.
Pay off your existing mortgage and get a new one – This option may be suitable if you're looking for a better deal or if your current deal isn't portable.
The additional amount you can borrow will depend on a few factors, such as your credit score. Try our mortgage calculators to check your eligibility and see what your options may be.
What’s the best option for my mortgage?
Moving house is a big financial decision and the best option for your mortgage will depend on your own personal situation. The following are all key points to consider when weighing up your options:
Can I move house without changing my mortgage?
If your mortgage is portable, you can move to a new house without changing your mortgage. This can be more straightforward if you are borrowing the same amount or less. Your lender will still need to approve the move and assess the new property.
Usually, changing mortgages means paying off the existing one, which can incur early repayment charges if you're still locked into a deal.
Can I use equity as a deposit for moving house?
Yes. When you sell your current home, the money left after any mortgage, estate-agent fees, conveyancing costs and other selling costs is your equity. You can use it as all or part of the deposit for your next home.
What if I own my current home outright?
If you have paid off your mortgage, you do not need to port a mortgage or repay a lender when you move. In this case, your equity is usually the sale price minus the costs of selling.
Your conveyancer can use the net proceeds from your sale towards the purchase of your new home. If you are buying and selling on the same day, this normally happens as part of the completion process.
For example, if you sell your mortgage-free home for £350,000 and buy a new home for £500,000, the net sale proceeds can form your deposit. You would need a new mortgage, savings or other funds to cover the difference and the costs of buying.
If the new home costs the same as or less than your available sale proceeds, you may be able to buy without a mortgage. You will still need to budget for buying and moving costs, such as conveyancing, surveys and any property taxes that apply.
What if I buy before my sale completes?
The value tied up in your current home is not available as cash until the sale completes. If your purchase and sale do not complete at the same time, speak to your conveyancer or mortgage broker early. You may need savings for the deposit, or to consider other arrangements. Short-term borrowing such as bridging finance can be expensive and carries risks, so get professional advice before using it.
If you need a new mortgage for the difference, the lender will assess your income, outgoings, credit history and the amount you want to borrow, just as it would for any other home-mover application.
Can I reduce my mortgage if I move to a cheaper house?
If you're downsizing, you may be able to reduce your mortgage repayments because you may need to borrow less. It's even possible to buy a cheaper home mortgage-free if you have enough equity to cover the cost of the new property.
What if I port my mortgage to a cheaper house?
Porting your mortgage to a cheaper property can be a sensible option if you don't need to borrow additional funds. However, be mindful of the Loan to Value (LTV) percentage. If your mortgage becomes a bigger percentage of the new property’s value, this may alter the lender’s expectations of you.
What if I’m in negative equity and want to move house?
Moving house when in negative equity, when the value of your home is less than the outstanding amount on the mortgage, is challenging. It's essential to consult with your mortgage provider to understand your options, as getting a new mortgage can be difficult and may come with restrictions.
What happens if I don’t intend to move to my new home immediately?
If there's a delay between selling and buying a new property, contact your mortgage provider about the possibility of porting within a certain longer? timeframe. If the move isn't immediate, you might need to pay off your existing mortgage, being mindful of any fees, and then look for a new mortgage deal.
What fees will I pay when taking out a home mover mortgage?
If you decide not to port your mortgage, you may incur extra fees when taking out a new mortgage. These can include:
Early redemption charges
Exit fees
Arrangement fees
Booking fees
Valuation fees
Broker fees
It's important to factor in these costs when deciding on the best mortgage option for your move, along with other fees such as conveyancing.
Get life insurance when you move house
For many homeowners, having financial protection in place makes sense. Life insurance can provide a financial safety net for your family, ensuring they're not burdened by mortgage payments if the unexpected happens. Learn more about our life insurance options.
Compare mortgages when moving home
MoneySuperMarket offers a service that allows you to compare mortgage deals when moving home. This can help you find the best option for your circumstances and ensure you're making an informed decision.
Remember, failing to keep up with mortgage repayments can put your home at risk, so it's crucial to choose a mortgage that you can comfortably afford. Find out how much you can borrow using our mortgage affordability calculator.
You can also use our our mortgage re-payment calculator to see what your repayments will be based on how much you’re borrowing, the interest rate and fees of the deal, and how long you will have to pay it off for.
Moving home is a significant life event that requires careful financial planning. By understanding your mortgage options and the associated costs, you can make a decision that supports your long-term financial health and helps you transition smoothly into your new home.
Useful guides
Your home may be repossessed if you do not keep up repayments on your mortgage.
Author
Tim Heming
Personal Finance Expert
Tim Heming is a journalist and editor who has written about personal finance for national newspapers and consumer websites for 15 years. Tim enjoys providing no-nonsense information to help consumers...
Reviewer
Mel Hunter
Money & Personal Finance Expert
Mel Hunter has worked as a journalist on national newspapers and magazines for more than 20 years. Writing for a wide range of publications, including Good Housekeeping, Woman & Home, The Telegraph...
