Can You Take Your Mortgage With You?
Many mortgages are portable, which allows you to take them with you if you move house.
Before moving, you’ll need to speak to your mortgage provider. They will need the details of your new house in order to re-secure the loan against the new property. If your new home is more expensive, they may increase your loan.
The time-frame for moving your mortgage contract is something to take into consideration. A handful of mortgage providers insist that the contract need to be applied to the new property on the same day that the old one is taken off. If you’re part of a moving chain and things fall through at the last minute, the lender could ask you to take out a brand new contract instead. However, most providers have a 3-6 window to allow for possible setbacks such as thing.
There are also fees to consider when moving the mortgage to a new property, but these are unlikely to cost as much as it would for you to take out a new contract from scratch.
If your mortgage is not ‘portable’, then you’ll need to shop for a new deal before you move house, which you can use to pay off your old mortgage in full and close the account. This is known as remortgaging.
The process of applying for a remortgage is very similar to buying a new property. Once you find a deal, you like the look of, you contact the lender and apply.
You’ll need to provide evidence of your income and current mortgage, and the lender will check your credit report. If you meet the lender’s criteria, you’ll be accepted for the new mortgage, and a solicitor will handle the transfer.
Remortgaging can cost quite a lot because you’ll need to pay fees towards both the old and new contracts. Most mortgages have early repayment penalties, which can be between 2-5% of the outstanding balance on your contract.
For example, on a mortgage with £200,000 left to pay, early repayment fees of 2% would cost £4000. The new mortgage provider will also charge arrangement fees to open the new account, and you may also need to factor in other charges, such as solicitors fees, depending on your situation.
Can You Choose Whether Or Not To Remortgage?
If you have a portable mortgage but don’t want to take it with you, you don’t have to! Many people use moving house as an opportunity to find a more competitive mortgage deal.
When you apply for a remortgage, the lender will assess your application as though you were a new buyer. Consequently, if your financial situation has stayed the same or generally improved since you took out your first mortgage, there is a chance you could be offered better deals.
If there are enough savings to be made in the long run, you may even feel justified to break off from your portable mortgage for the higher upfront costs of a remortgage.
Can You Move At Any Point During Your Mortgage?
Where you are in your mortgage’s lifetime can have an effect on how easy it is remortgage- and how much it would cost you to do so.
If you are on an introductory deal- such as a 5-year fixed-rate, tracker or discount mortgage- you could face high costs to leave. Most lenders require you to stay until the end of an introductory deal and charge hefty early repayment fees if you decide to opt-out before this.
On some of the cheapest deals, providers may even include tie-in clauses, which require you to stay with the lender for a certain number of years before trying to remortgage. In most cases, contracts like this are portable, meaning you can take them with you to your new property- but a remortgage is out of the question.
If, like most people, you’re on you’re lender’s standard variable rate (SVR) then you’ll be charged minimal early repayment fees. Some lenders may even waive exit fees for SVR customers.
What Is The Cost Of Moving Mid-mortgage
The mortgage-related costs of moving house will depend on your contract and whether your mortgage is portable or you’re looking to remortgage.
Here is a breakdown of fees you may need to pay to your current mortgage provider when moving house, including guideline costs:
- Early repayment charges if you’re remortgaging, leaving an introductory deal, or borrowing less on a portable mortgage: 2-5% of the balance
- Account closure fee: £50-£300
And here are the fees you should expect to pay the new provider if you’re planning to remortgage: provider:
- Application fee: £100-£200
- Arrangement fee: Up to £2000
- Valuation fee: £150-£1500
- Solicitors fee: £500-£1500
What If The House You Want To Move To Is Worth More?
When you remortgage, lenders treat you as a new customer, so you’re planning to take on a larger mortgage you’ll need to ensure that you meet the lender’s criteria for the amount you want to borrow. Your earnings, outgoings, credit history and any additional cash deposits will be taken into account by the lender when you apply.
If you have a portable mortgage and would like to extend it, you’ll need to meet the lender’s criteria for the amount you want to borrow. The lender may charge additional fees or increase your interest rate if you increase your borrowing.
Another option you could consider is taking out a second ‘top-up’ mortgage as well as your portable mortgage. This is a separate contract with its own repayment terms and interest rates, which allows you to keep hold of your current deal without changing the interest rate or repayment terms.
What About If You Want To Downsize?
When you remortgage for a cheaper property, your loan-to-value ratio (LTV) increases. This is a measurement that lenders use to work out how much of a property you own outright have in relation to the mortgage. By downsizing, you automatically decrease the amount you need to borrow- so your LTV increases. Lenders tend to offer lower interest rates for borrowers who have a high LTV.
If you have a portable mortgage, the lender could charge you early repayment fees for borrowing less. This is a way for them to make up for the profit they would lose by giving you a smaller mortgage on your new property.
Early repayment fees are normally 2-5% of the balance to be paid off. For example, when moving from a £200,000 house to s £150,000, the mortgage is reduced by £50,000. With a 2% penalty fee, a borrower would be charged £1000 for the early repayment of £50,000 from their mortgage.
What If My Credit Rating Has Changed?
If your credit rating has taken a hit, you could find that new lenders are not willing to offer you competitive remortgages. If this is the case, it may be worth taking steps to try and improve your credit rating before moving house.
Even with a portable mortgage, your current lender could choose to increase your interest rate if you ask to add additional funds to the loan. However, if the mortgage remains the same size, a lender cannot adjust the contract based on your credit rating when you port a mortgage.
On the other hand, if your credit rating has improved since the time you first applied, it is possible that the offers you would get if you tried to remortgage would be more competitive than the offering from your current provider.
How Can The Mortgage Bank Help?
Here at The Mortgage Bank, we have partnered with some of the UK’s leading mortgage brokers.
They have already helped thousands of people get the best remortgage deal even people that have been refused before, and they can do the same for you.
Choosing an independent adviser means they won’t recommend a scheme unless they are sure it is in your best interests. Their advice is also regulated by the FCA, which gives you an additional layer of protection.
If you would like to speak to one of these brokers who can provide you with a ‘whole market quote’ then click on the below and answer the very simple questions.