Moving Home Mortgage Advice

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Moving Home Mortgage Advice

Home Mover Mortgage

Rita Kohli explains the home mover mortgage process.

What is a home mover mortgage?

A home mover is essentially somebody moving house. Say, for example, you’ve bought a house as a First Time Buyer and you’ve now outgrown it. You’ve maybe had a family, met a partner, you want to expand the space you’re living in. You’re now moving home.

What is a Mortgage in Principle and how do I get one as a home mover?

Sometimes the terminology in the industry can be a bit confusing. A Mortgage in Principle can also be known as an Agreement in Principle – it just depends whether you speak to an estate agent or a mortgage advisor.

They’re the same thing – a certificate of how much you can potentially borrow. To obtain one, you see a mortgage advisor and go through your financial circumstances, your goals, your aspirations. Based on that, we’d look at different lenders and their criteria.

We would then go through to pre-application – that doesn’t fully credit check you but is enough to confirm a lending amount. You get a letter or certificate to show your estate agent that you’re financially credible.

How long does the mortgage application process take for a home mover?

The first meeting is an initial introduction, going through your financials and circumstances. We request relevant documentation, because we like to preempt what a lender will be looking for and any questions they may have.

It’s about an hour for the meeting, and when we’ve gathered all the information, within 48 hours we will have vetted everything and you’re ready for an application. It can all be done within a week.

Once everything’s vetted and you’re happy, the application takes an hour or so. We’ve checked the lender’s criteria, you’re happy with the rates, we’ve had a second meeting to go through the deal and what’s it going to cost you per month.

We then talk you through all the next steps. The main thing is that you want a mortgage offer to carry on planning to move house.

What is the maximum amount that can be borrowed on a mortgage as a home mover?

It depends on your financial situation. What are you earning? What’s your job situation? How much deposit have you got? Where’s that deposit coming from? Are there additional savings to cover the extra fees when you’re selling and buying?

You may be doing a Buy to Let and raising some capital to buy your onward property. There are different scenarios to consider. You also need to think about stamp duty and legal fees. On top of that we need to know how many dependents you have and any childcare costs – all of that will then factor into the maximum you can borrow for the next property.

What is the minimum deposit required for a home mover?
You can do a 10% deposit, and some specialist lenders allow 5%. As a general rule, 10% will open up more doors for you. More lenders are comfortable with a 10% deposit.

Normally with home movers, you’re using the equity from your property so you generally have more than 10%. That’s even better for you from a cost perspective, because the rates tend to be lower. Because you’ve got more deposit, you’re less risky so you’ll have more affordable monthly payments.

What are the eligibility criteria for a mortgage as a home mover?

You need a regular income – that could be a mixture of employed and self-employed. Perhaps one partner is self-employed and the other is employed or you’re both running the same business. You could have Buy to Let income in the background. You might have pension income or benefit income.

You need some deposit to put towards the next property. Having a nice clear credit score would also help, but if not, it’s not the end of the world.

Can I get a mortgage as a home Mover if I have bad credit?

It really depends. What might seem bad to you might not be bad to me, because I know what a lender will look at. The important thing is obtaining your credit report. That’s the first thing I would ask about alongside your income and your deposit.

If you’ve got a fairly good deposit but you’ve had a blip on your credit file, it’s not the end of the world. Some lenders will ask about the circumstances behind it. If, for example, it could be that you’ve had a divorce and certain bills hadn’t been paid, causing defaults on your credit file, we can explain that.

If we’ve got evidence to show that you’ve kept on top of everything since and actually you’re building your credit file up, that’s actually a positive thing. If you’ve got a sizeable deposit, it shows that you are planning ahead and heading for a better financial situation.

If your bad credit is quite recent, it may be that you can’t necessarily apply to a high street lender but there will always be some specialists that will consider you. There are loads of options when you’re looking at the whole market.

The main thing is discussing what your credit file looks like, what steps will improve that and whether you’re willing to wait until your circumstances are better before applying for your mortgage.

What types of properties can be purchased as a home mover?

When you’re a First Time Buyer you tend to look for a way to get on the property ladder. It might be a one or two bedroom flat. Typically, you’re upsizing when you’re moving home.

It might be a bigger flat again, but usually people aim for a house, with perhaps two, three or four bedrooms depending on what space and size you need. There are no hard and fast rules.

What is porting?

If you have a mortgage and you are tied in on a fixed rate, paying off your mortgage during the time can mean you have to pay penalties called early repayment charges. Because you asked to fix for a certain time and now want to end the deal early, your bank penalises you.

To avoid paying a penalty, you can take your existing fixed rate mortgage to your next house. That’s porting. That way, you can keep the existing rate. If you need a bigger mortgage for a bigger house, you would arrange for a top-up to go alongside your existing mortgage.

It’s a bit technical, but in essence porting can help you avoid paying extra money where you don’t need to. 

Speak To an Expert
We’ll help you compare mortgage offers from different lenders and find the one that’s right for you. We can also answer any questions you have about the mortgage process and help you understand the paperwork.

What are the interest rates for a mortgage as a home mover?

Interest rates can vary – it’s circumstantial, based on the size of your deposit and other factors. If you put in a 10% deposit, a lender will charge you higher rates because it’s a 90% mortgage. If you’ve got a 40% deposit, they’ll give you a lower interest rate because you’re only borrowing up to 60% of the property value.

So the bigger your deposit, the lower your interest rate. You still have all the product options as when you first bought your first house. We can discuss fixed rates and whether they are suitable, or look at a tracker, variable or discounted rate.

There’s lots of terminology. Our job really is just to explain what it means and what might work for you. I can’t get into the specific interest rates because they change on almost a daily basis.

What is the duration of a home mover mortgage?

When you apply for a mortgage, all the underwriting is checked and valuation is booked. Once you’ve had a mortgage offer, it’s a legally binding contract where the lender says yes you can have this money.

That offer document is typically valid for six months, so that’s when you are aiming to be in the next property. If you are selling your property, you’re relying upon the next person buying your property – it then becomes a chain.

The timing can be out of your hands – it’s all solicitors communicating with each other to align a date of when you’re actually going to move. Six months is a steer – but it could be anywhere from two months – that’s the quickest I’ve ever seen it happen where there was no chain.

There’s all the practical side to moving – getting keys and arranging for removal companies so everyone needs to agree on a date. It usually takes three to six months until you finally move in.

What are the fees associated with a mortgage as a home mover?

You will have stamp duty costs, legal fees and mortgage fees, which typically range between from zero and £2,000. It’s all part of a conversation we will have around interest rates.

We’ll explore what you want and if you have any savings to pay those mortgage fees upfront. They also be added to the mortgage itself, but you will then be paying interest on those fees.

If you don’t have savings and are using everything towards the house move, there are some mortgages with zero fees. It could mean a slightly higher interest rate. On the flip side, you might decide you would rather pay £1,000 to get a slightly lower rate.

What happens if I can’t keep up with repayments on my mortgage as a home mover?

First and foremost I would say that you touch base with your lender. By all means contact your broker to give you a helping hand on what direction to go.

If you can’t keep up with your repayments for any reason, contact the lender. They will have plans in place – they will refer you on to specific teams to work through a budget with you.

They will see if they can compromise on your mortgage payments. You don’t want to ignore the situation, because at that point it becomes a default. Even worse, the end result could be repossession of the property.

Can I get a mortgage as a home mover if I’m self-employed?

You can certainly get a mortgage if you’re self-employed. It all comes down to how long you have been in business, what you do, how many people are in the business and what your accounts look like.

We will look at your bottom line and net profit. If you’re with a partner who’s employed, that will help boost your household income. If they’re also self-employed we will look at both parties’ average net profits over the last two years.

Lenders like to look at that, and also whether your annual accounts are in an upward direction or steady. But generally there’s nothing stopping you getting a mortgage.

How does remortgaging work as a home mover?

Porting is where you’re moving house and you’re taking your mortgage with you to the new property. Remortgaging is where you stay where you are – you’re not moving home but you’re getting a new mortgage.

You might remortgage to release some money for various different reasons. You might swap to a different deal with your lender, or move to a different lender.

Can I get a Buy to Let mortgage as a home mover?

If you want to keep the house where you currently live, you might decide to let out your current property when you move. In that case you can apply for a Let to Buy. That’s the industry terminology.

As far as we’re concerned, it’s still a Buy to Let because you’re renting it out and it’s now becoming an investment property. At the same time, you may want to use it to raise money for a deposit for your next house purchase.

We would need to understand your income, the property value and how much rent you can get for the property you want to let out. All of those factors help us assess what the lender would be likely to release.

If you don’t need to raise any money, you can literally swap mortgages. We switch whatever your existing balance is over to a Buy to Let – or Let to Buy – deal.

What else do we need to know about home mover mortgages?

With any house move, coming in early to see an advisor makes it easy to start the planning process. You might not know exactly how much you can aim for with the new property or which direction to head in.

Coming to see a mortgage advisor helps you get everything organised. You may decide you won’t be ready for another six months or a year – in which case we’d contact you then and see how you’re getting on.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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You are now leaving the website of The Mortgage Stop Ltd and we cannot be held responsible for the content of this external website.