Article created by Christian Duncan, Director – Mortgage and Protection Adviser
Last updated 9th August 2023
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Relocating to a new house can seem like an overwhelming experience. However, understanding the process can make it a less daunting. If you’re planning to move and wondering, “how does moving house work? How do mortgages work when moving house?”, you’ve come to the right place. This guide aims to answer these questions, provide valuable insights on mortgages when moving house, and simplify the moving house mortgage process.
What Happens to Your Mortgage When You Move
When you decide to move home, one key consideration is the fate of your existing mortgage. Do you transfer it to the new house, or take out a new one? Typically, there are three possible scenarios:
Porting Your Mortgage: This means transferring your current mortgage to a new property. This process is also referred to as ‘porting a mortgage.’ It is not always possible and depends on the individual terms and conditions of your mortgage agreement.
Taking Out a New Mortgage: You might decide to borrow additional funds to buy the new house. This usually happens if you’re eyeing to move into a bigger home or a more expensive area.
Utilizing Home Equity as a Deposit: If you’ve built considerable equity in your current home, you can use it as a deposit on your new home.
Whether to port, take out a new mortgage, or use equity largely depends on your financial circumstances and preferences.
Can You Afford to Move House?
Completing a full fact find and running a mortgage affordability check will give you an idea of how much you can afford when your moving house is on the horizon. You can do this by booking a call with us.
Factors Influencing the Relocation Process
Often, those looking to relocate ask, “Can mortgage be transferred to the new house?” or “Can I move my mortgage to another bank?” The answer largely depends on the type and conditions of your current mortgage.
A fixed-term mortgage, for instance, often comes with an early repayment charge. In such a case, transferring the mortgage before the end of the term may not be cost-effective.
On the flip side, if you own your house outright, you may consider remortgaging to release money from your property. This provides extra finances to facilitate your move. It’s might also be possible to transfer your mortgage offer to a new property, or even change mortgage providers after the fixed term, depending on your current mortgage agreement.
How Long Does It Take to Move House in the UK?
The duration it takes to move house depends on various factors such as your property chain, the amount of paperwork, and the conveyancing process. On average, it may take anywhere between 8 to 16 weeks.
Step-by-step Guide to Mortgages When Relocating
Navigating the mortgage process when relocating involves several steps. The following guide can help ensure a smooth process:
- Assess Your Mortgage Situation: Review the terms and conditions of your mortgage. Should you port, take a new one, or use home equity?
- Run Mortgage Affordability Checks: Speak to a mortgage broker to understand what you can afford.
- Secure a Mortgage Agreement in Principle: It gives you an idea of how much you can borrow.
- Find a Property: Once you’ve secured a mortgage in principle, start hunting for a new property.
- Appoint a Solicitor: Your mortgage broker will be able to recommend a conveyancing solicitor to handle the legal paperwork.
- Finalise Your Mortgage: Once you’ve found a property, finalise the mortgage application.
- Exchange Contracts and Move: After the contracts are exchanged, you can finally move into your new home.
Moving house is a significant life event that can impact your mortgage situation and monthly disposable income. By understanding the process involved in transferring or taking a new mortgage, you can make informed decisions.
In your quest to find your dream home, remember – preparation is key, patience is virtue, and knowledge about the mortgage process is indeed power.
Considering Changing Mortgage Providers
In your quest to make the moving house mortgage process seamless, you may also be asking, “Can I change my mortgage provider?” Indeed, it is possible and sometimes advantageous to switch mortgage providers when moving to a new house. This is typically referred to as ‘remortgaging.’
Remortgaging means either taking out a new mortgage with a different lender to pay off the existing one or negotiating new terms with your current provider. Here are few circumstances where this might be beneficial:
To Secure Better Interest Rates: If your current mortgage provider doesn’t offer competitive interest rates, you might decide to switch to one with more favourable terms.
To Access Better Features: Some mortgage providers offer extra features such as flexible payment options or offset accounts. If your current lender doesn’t offer them, you might choose to switch.
To Consolidate Debt: If you have other high-interest debts, you might decide to consolidate them into your mortgage for a lower overall interest rate.
Bear in mind that changing mortgage providers, especially before the end of a fixed-term contract, may come with penalties or additional charges. Make sure to seek advice from a financial expert or mortgage broker to understand the potential costs and savings.
Using Equity as a Deposit When Moving House
Another contentious issue when moving house is “Can I use the equity as a deposit for moving house?” The answer is a resounding yes.
Equity is a percentage of your home that you actually own – the difference between its market value and the remaining mortgage balance. If you’ve built a substantial amount of equity in your home over time through mortgage repayments and an increase in property value, this equity can potentially be used as a deposit on a new property.
Extending Your Mortgage Term
“Can I extend my mortgage term during a fixed rate?” Yes, you can. Adjusting the term of your mortgage can reduce monthly payments but may increase the overall amount of interest you pay over the duration of the loan.
Again, it’s crucial to seek advice from a mortgage broker or financial advisor before extending your term, as it’s a significant commitment that will affect your finances for several years to come.
Remember, moving to a new house signifies starting a new chapter in your life, and while it can be a complex process, it’s ultimately rewarding. Understanding the nitty-gritty of mortgages when moving house can seem like a herculean task, we are here to provide expert advice tailer to your needs.
This article aims to provide general information and does not constitute professional advice. If you would like advice tailored to your circumstance then book an appointment with us