Posted on 28 November 2018 by
So you’re looking to move home? The process of moving home is usually for positive reasons, like moving to a new area, buying a larger property or because you’re starting a family or perhaps a new job? It’s often said that the process of moving home can be stressful and traumatic but it needn’t be, at least not from the perspective of your existing mortgage finances.
So, if you’re looking to make a fresh start and already have a mortgage on your current home our top tips will help ensure the process is as smooth as possible:
It's a good idea to involve your mortgage broker when you're first thinking about the process of moving, they’ll be able to, with your permission , talk to your existing lender and advise on the best plan of action. Most mortgages nowadays are portable, meaning that you can ’drag and drop’ the mortgage to the home you want to move to. Your existing lender will want to value the new property –if you need to borrow more if upsizing, then this would be subject to underwriting. It’s therefore a good idea to get your mortgage broker involved in this process as there may also be fees to pay for the transfer and they’ll be able to ensure you’re getting the best deal.
That’s early repayment charges to you and I. Moving home can often be a great opportunity to look around for a better mortgage deal and if you’ve built up equity in your property since you originally bought it, you may be able to get a better rate and reduce your monthly repayments. Current rates on long term fixed deals are low, so it’s a great time to speak with your broker and see what deals are out there. But, as with a remortgage, you should start by checking whether there are any penalties to pay on your existing home loan. Your mortgage broker will be able to help you do this and they’ll look at fees and additional interest charges you’ll have to pay if you’re still in the benefit period of your existing loan - e.g. if you still on a fixed or discounted deal rather than being at the end of the deal where you’d revert to your lender’s standard variable rate (SVR).
To ensure you will be better off switching your mortgage provider your mortgage broker will run the calculations and aim to find you a deal to ensure that any benefit in terms of cost saving is offset by the cost of the ERCs.
If you're thinking of moving mortgage lenders, it’s important to understand that the market over the past year or so has changed significantly and you're likely to be assessed against a much stricter criteria than before the credit crunch.
You'll find that you’ll be asked a lot more questions about how you spend your money than you may have been used to, and potentially more paper-chasing involved before you'll be able to move your mortgage.
On the flip side, if you’re sticking with your existing lender but transporting your current, you’ll still have to meet their criteria. While your personal circumstances may not have changed, your existing lender's criteria may have. You mortgage broker will be able to advise on what your options are if this is the case – it may just mean you need to a find a lender more suited to your current position.
Switching lenders isn’t a big deal and if you’re moving because you’re upsizing and need to borrow more it’s common to find that your existing lender may not allow it. As long as you’ve spoken to your existing lender, are aware of any early repayment charges and have a good broker who understands the market, the process should be relatively straightforward.
When taking out a mortgage always give lots of thought as to when your next move might be before you lock yourself into another deal - even if it is 'portable'.
You may be better off going for a two or three-year fix, rather than a five or ten year deal. Shorter deals can provide more flexibility so that when you do move you can shop around and have a choice of deals so you aren't restricted to the same lender. Equally if you are planning to stay in a house for a long period of time, perhaps because you have children or it’s a retirement home would a longer deal suit you better?
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.