At Goldmanread, we believe there is no such thing as an obvious question when it comes to mortgages. We’re often asked by homeowners if and how they can move home while they are in the midst of a mortgage term.
You can move home if you already have a mortgage. You may be able to port your mortgage or arrange a new deal with your existing or new lender. If you are looking for a second home, it’s possible to retain your mortgage when you move. Or, you could arrange a let-to-buy mortgage to rent out your existing home.
I’ll explore this topic further in this blog article.
If you are seeking a home mover’s mortgage, we can help you get in touch with the experts at Goldmanread. We are independent mortgage brokers and can help you understand your options and find a competitive deal from a wide range of lenders.
What mortgage options are there when moving house?
You have four main choices in this scenario:
1. Port your existing mortgage
Porting your mortgage means transferring your current mortgage deal, including its terms and conditions, from your existing property to a new one. The advantage of porting the same mortgage is avoiding an early repayment charge. It’s also an attractive option if your current deal has a particularly favourable interest rate.
Most lenders will allow you to port your mortgage and, in some circumstances, will agree to additional borrowing.
It’s important to be aware that not all lenders automatically agree to port a mortgage deal. Some will treat the ported mortgage as a new mortgage loan and will reassess your income and liabilities from scratch. So, it’s important to thoroughly review your credit report prior to applying.
2. Remortgage, i.e. find a new mortgage deal
You could take the opportunity to seek a new mortgage, either from your current provider or a new provider. If you take a new mortgage with your current lender, it’s important to be aware that you might not retain your current interest rate.
This option provides homeowners with the opportunity to reassess their mortgage deal, potentially securing a more favourable interest rate or adjusting the loan term. However, it’s crucial to be mindful of associated costs such as early exit fees, arrangement fees, a valuation fee and legal expenses.
If you are moving to a more expensive property, you may be able to arrange a larger mortgage via a top-up mortgage with your current lender.
3. Let-to-buy
Another way to move house whilst you have a mortgage is to arrange a ‘let-to-buy’ on your current mortgage. This means that you ask the lender for permission to rent out the house to cover the mortgage repayments (called ‘consent to let’). Most lenders will agree to this as long as the proposed rent meets the monthly repayments. You then arrange a separate mortgage on the new property you wish to buy.
Your existing lender will usually charge an arrangement fee for allowing you to rent out your current property. Your new lender will usually ignore the current mortgage and discount it when assessing the new mortgage loan.
You need to be aware that not all lenders will allow or approve a consent to let. There must be a genuine reason for wishing to arrange this. Where a lender will not agree on this scenario, you may have the option of remortgaging your home to another lender on a buy-to-let basis. In this case, you may incur an exit fee on your current mortgage.
4. Keep your mortgage and use your existing property as a second home
Finally, you may be able to keep your existing mortgage in place if you intend to use your existing home as a second home or holiday let. As long as you meet the lender’s affordability criteria to borrow a new mortgage, they will allow you to do this.
You keep your existing mortgage loan on your home, which you continue to use as a second home whilst moving to your next home. In these circumstances, this will not be classed as a let-to-buy, so the lender will factor in the monthly costs involved, i.e. mortgage and utility bills, as part of your overall affordability calculation.
How long after getting a mortgage can you move house?
Generally, you would have to have spent an extended period in your house before arranging another mortgage. Having said that, there are no hard and fast rules as long as your wish to move home is for a genuine reason, e.g. you are relocating for work or if you have a relationship breakdown.
Lenders may become suspicious if you purchase a home on a residential basis and immediately look to move home and rent the property out. They would potentially class this as mortgage fraud.
Also, if you recently purchased with a small deposit, you could be in negative equity, which would make it harder to move.
Do I need to remortgage if I move to a more expensive property?
In some circumstances, you may have to remortgage if you move to a more expensive property. This could be the case if your existing lender does not allow you to arrange a ‘consent to let’ on your existing mortgage deal. In these circumstances, the lender may require you to remortgage the property on a formal buy-to-let basis (subject to you meeting the new lender’s criteria).
Depending on the specific lending criteria of your mortgage provider, you may be able to arrange a larger mortgage via a top-up mortgage, although this will not necessarily be at the same rate as your old mortgage. This is a good way of avoiding any early repayment exit fees from your old mortgage.
Speak to Goldmanread today to discuss your mortgage options
If you are thinking of moving house and want to review your full mortgage options, it’s beneficial to speak with an independent mortgage broker.
At Goldmanread, we have been providing mortgage advice for over 15 years and have access to a wide range of mortgage options across the market. Our experience means we can help you make the right decision, taking into account your individual circumstances.
We have access to a wide range of mortgage deals from different lenders. Our team can advise you on whether it’s worth taking a new deal that might require you to pay early repayment charges and a new arrangement fee. Alternatively, we can help you decide if it’s better to retain your current mortgage.
Contact us today to get started.
Frequently asked questions about moving house with a mortgage
Will funds be released if I move to a cheaper property?
It is possible to release equity from your home to raise money to fund the purchase of a cheaper property. This is subject to the lender’s borrowing criteria and their assessment of your affordability.
Can you have two mortgages?
Yes, it is possible to have two mortgages, subject to a) you being able to afford both mortgages or, b) the repayments on at least one of the mortgages being covered by rental income.
Getting two mortgages very much depends on your circumstances and whether it is worth retaining your existing mortgage. For instance, if you face paying early repayment charges, you should you repay your mortgage. It may also be that your existing deal from your current provider is arranged on a particularly competitive mortgage product.
