What happens to your mortgage if you want to move house?

Moving house with a mortgage to repay leaves you with two options: either you move your mortgage from one home to the other or you remortgage.

In both cases, your best bet is to involve your mortgage lender or broker at the earliest possible opportunity, and see what they advise.

Most mortgages are portable. This means you should be able to transfer it from the property you are moving from, to the home you want to move to, without any issues.

Your mortgage lender will want to value the new property and in some cases, you may need to borrow more to secure it.

Keep in mind that there could also be fees to pay for the transfer, which usually costs a few hundred pounds.

Think carefully before securing debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Remortgaging penalties

While porting your mortgage and staying with the same lender may be easier, moving home can be a good opportunity to start looking around for a better mortgage deal.

But remortgaging comes with its own fees too.

Check whether there are any penalties to pay on your existing home loan should you decide to switch.

There are likely to be fees and additional interest charges if you’re still in the special offer period of the loan, or on a fixed or discounted deal, rather than the lender’s standard variable rate.

All of this means that in order to be better off when you remortgage, you’ll need to find a deal that’s cheap enough to cover the cost of these penalties.

Look for a better mortgage

On the whole, it’s going to be easier to save money if your current deal is penalty-free.

Although mortgages for those moving home are increasingly competitive, with variable rates starting at around 3% and fixed rates currently priced a little higher, lenders may add arrangement fees and other charges to the mortgage value by adding to the headline rate of interest payable.

Credit assessment

Whether you’re porting your mortgage with the same lender or remortgaging completely, you’re going to be assessed against a much stricter criteria than before the credit crunch.

This will include more questions than before, with a lot more paper-chasing thrown in too.

When it comes to porting, you’ll have to meet the lender’s criteria at that particular point in time. So, while your circumstances might not have changed, your lender’s criteria might now be stricter, which means you may no longer be eligible to move your mortgage.

Switching mortgage lenders

If you can’t port your mortgage with the same lender, then your only options are to cough up an early redemption penalty, or to stay put in your current property.

All of this means that when it comes to taking out a mortgage, try to think about when you might next want to move as soon as possible. This will mean you avoid getting locked into a deal, whether you’re asked to pay extra fees to port the mortgage to a new home, or remortgage completely.

Opting for a two or three-year fixed term the next time you apply may give you more flexibility and allow you to shop around for the best deals, without being too restricted to one lender.

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