Home Mover Mortgages
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Home Mover Mortgages
What types of properties can be purchased as a home mover and what types of mortgages can I get as a home mover?
In terms of properties you could purchase, a standard house, a flat, townhouse or any type of property is absolutely fine as a home mover. It could be second-hand residential or it could be a new build.
You might be downsizing or upsizing for whatever reason, and any type of property is available to be purchased as a home mover. There are no restrictions there.
In reality, you get access to all the types of mortgage products. That means fixed rates, tracker rates and other variable products. Every single lender will offer a portfolio of products for home movers – so again there are no restrictions.
You could also look at capital repayment mortgages or interest only options, as well, subject to your circumstances.
What is a Mortgage in Principle and how do I get one as a home mover?
Speak to us. We’ll be able to take care of everything and get a Mortgage in Principle for anyone looking to move home.
A Mortgage in Principle is simply pre-approval. Before you take steps to put your property onto the market, incur costs with estate agents and home reports, it’s really important to understand that you could get a mortgage for where you want to go.
You also need to understand your costs for moving – in terms of legal fees, estate agency fees, mortgage fees, stamp duty and all these types of things.
A lot of people when they bought their first home may not have paid Land and Buildings Transaction Tax as it is in Scotland, whereas with a home move to a larger property, that might become applicable. So it’s important that we look at the cost of moving and get that Mortgage in Principle as pre-approval so that dream house could become a reality.
How long does the mortgage application process take for a home mover?
It’s a fairly similar timeline whether you’re a first time buyer or home mover. The key thing is understanding your current position. Typically you will be in a property at the moment with a mortgage on it.
So we need to analyse and research whether it is possible to port across your existing mortgage – subject to lender approval – and top it up with additional borrowing.
We look at those options versus taking the penalty on the existing mortgage and starting a new mortgage with a new lender. That’s the only element that could take a wee bit longer when you’re a home mover versus somebody that doesn’t have anything to sell.
Speak to a broker as soon as possible, to understand what to do with the existing mortgage. It’s important that we carry out that due diligence right at the start of the journey.
What is the maximum amount that can be borrowed on a mortgage as a home mover? What is the minimum deposit required?
It’s no different from any other mortgage application. It’s all based on affordability. It’s no longer a case of income multiples, but we could look at exactly what you could borrow based on your annual salary.
We look at your income and also your commitments. What’s interesting for a home mover is that they very wish to repay credit commitments and move into the new property with a clean slate.
We could look at what your affordability is going to be like if you retain those commitments or potentially use equity to pay some of those off.
In terms of the deposit, 5% is the standard minimum. You could get the highest Loan to Value category. The key thing for a home mover is advice, especially around whether you stay or go with the existing mortgage.
Being a First Time Buyer is confusing, but being a mover is even more challenging because you’re both selling and buying. Speaking to a broker could help you make that process stress-free.
What are the eligibility criteria for a mortgage as a home mover?
Obviously as a home mover there’s a good probability that you’ve had a mortgage for a certain period of time. Whether you remain with your lender and transfer it across to a new property, or you look at a new lender, there will be a payment record on that existing mortgage.
That’s slightly different from a First Time Buyer, and so there would be more due diligence there – but in general it will work in your favour. If there’s been good mortgage payment conduct, that helps the application process.
Can I get a mortgage as a home mover if I have bad credit?
Yes. Don’t ever let credit be a barrier to a conversation. It’s important that we understand where you’re at, and there’s always a lender for everybody.
Lenders could be brilliant with existing customers who are looking to move home. So even if you don’t meet standard eligibility criteria, if you’re not increasing your borrowing, your current lender will help facilitate that move – even if your credit history doesn’t meet their usual limits.
Some people are in properties that may have become a bit too expensive for them. They might be worried about talking to us if they have had some credit issues in the past couple of years. But it has been a tough economic climate for everybody. Your lender may well be able to help you.
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What does porting a mortgage mean?
If you’re a home mover with an existing mortgage you may be tied into that product. Let’s imagine you selected a five-year fixed rate when you moved into the property, and now you’re two years in and you want to move.
One option is to cancel the mortgage, pay the penalty and then seek a new lender. But another option is to consider porting the mortgage across. You’re tied into the mortgage product but you’re not tied into the property. Subject to a new application, you could transfer that mortgage from your existing property to your new home.
It’s a new assessment, so we still need to look at your income, outgoings and your affordability needs to be acceptable.
Typically, when people are looking at porting, they’re upsizing – which usually means they need to borrow some more money. You could top up that original mortgage with new borrowing.
It might just be that you’ve got two sub-accounts within the main mortgage account. It enables you to transfer your mortgage from your current property to your new property. Ultimately, you avoid potential penalties involved in redeeming the existing mortgage.
What is the duration of a home mover mortgage?
It’s just the same as any other mortgage. Once it’s approved, you’ve typically got a validity period of six months on the offer. It’s possible to extend that on a case-by-case basis.
Six months is plenty of time to get a new property and get everything concluded.
What are the fees associated with the mortgage as a home mover?
The majority of lenders will have different products ranging from higher rates with lower fees, or lower rates and higher fees. A typical fee could be £999, which could potentially be added to the loan – although be conscious that you’re then increasing the borrowing over a longer period of time. You could also pay those fees upfront.
It very much does depend on the loan amount you’re looking for – that will determine the type of product you could select. There are fee options or no fee options.
Other fees when moving house are one-off costs like estate agency costs, stamp duty and legal costs. It’s important to understand the cost of moving, but in terms of mortgage fees there’s no difference for a home mover or a standard First Time Buyer.
What happens if I can’t keep up with repayments on my mortgage as a home mover?
If you fail to keep up to date with your payments, it may have an impact on your credit file. If you’re finding things challenging, reach out to a broker – as there might be things we could do to help. Potentially we could extend the mortgage term, for example.
You should also speak to your lender. Lenders are brilliant at helping clients where they could. They’ll look to potentially make your mortgage interest only for a period of time, as an example, until you could get over whatever circumstances are causing an issue.
Is it more difficult to get a mortgage as a home mover if I’m self-employed?
No, it’s not more difficult. The only difference is how the income is assessed.
Whether you’re employed or self-employed, how lenders assess your affordability will depend on your taxable earnings. Someone with nine-to-five permanent employment would need three months’ pay slips to evidence those earnings, with corresponding bank statements.
If you’re self-employed, it’s slightly different. You have an inland revenue tax return called an SA302 and a tax year overview. These provide a qualified summary of your earnings.
It’s helpful to be proactive, and at Envoy we typically liaise with a self-employed client’s accountant to make sure we’ve got all the documentation required for that mortgage application.
So being a self-employed home mover is not a problem. It just comes down to your earnings. But it shouldn’t be a barrier for a discussion.
How can a mortgage broker help here?
Moving home is challenging because there are decisions to make around keeping your existing mortgage and whether to put your property on the market or wait to find something first.
We help you navigate that complicated process in a seamless, stress-free manner. So if you’re thinking about moving home, whether it’s this year or next year, get in touch with us and we could talk you through what you need to do and where you need to be.
Everybody loves looking at Rightmove and we all have property aspirations. I like to think we could help turn those aspirations into reality, by putting the numbers behind them.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.