When selling your house and buying a new one, it is important to consider the details of your current mortgage to determine whether it is portable. This means that you can transfer your existing mortgage to your new home without having to pay it off and take out a new mortgage altogether.
To find out if your mortgage is portable, you can check the documents provided when you arranged the deal or ask your mortgage broker or lender. However, it is important to note that some mortgages may not be portable, in which case you will have to pay off the existing mortgage with the sale of your old home and take out a new mortgage for the new property.
Even if your mortgage is portable, you will still have to reapply and go through the same affordability and credit checks as before. Additionally, you will need to pay for a valuation, legal fees, and stamp duty. It is also possible that your financial circumstances have changed since you first applied for the mortgage, which could make it harder to get approved for the same mortgage now.
If you are unable to port your mortgage, you will need to pay off your existing mortgage from the sale of your old home and then take out a new mortgage for the new property. The lender will run credit and affordability checks to be confident that you can make the repayments.
Even if you do not need to borrow more money for the new property, you will still need to prove that you can afford the loan should your financial situation change, such as if you have recently become self-employed, if you have changed jobs or if you have more credit commitments than before.
When taking out a new mortgage, you may face arrangement fees for setting it up and early redemption charges for paying off your existing mortgage if you are still tied into an introductory period. In some cases, it may be more cost-effective to remortgage rather than porting if you are buying a more expensive property.
If you are purchasing a new home of the same value or even a cheaper one, porting your mortgage could be a good option, especially if you are currently on a competitive mortgage rate. Keep in mind that if you need to increase the size of your loan to buy a more expensive property, you will need to meet the lender’s borrowing criteria for the extra amount and may have to pay a fee for arranging the new mortgage.
Another option is to take out a new mortgage with a new provider if you can find a more competitive deal. However, this may entail paying early repayment charges and other fees to end your current mortgage deal, so careful calculations are necessary to determine the most cost-effective option.
If you are looking to downsize, you may be able to take out a smaller mortgage and reduce your monthly repayments, as long as your personal financial situation has not changed. If you own a significant portion of the equity in your home, you may be able to get a cheaper home mortgage-free by using the equity you have built up in the new property to buy the new home and clear the mortgage.
It is important to note that if your home is in negative equity, meaning it is worth less than your existing mortgage, you should talk to your mortgage provider before proceeding with any plans to purchase a new home. This is because it may be harder to be accepted for a new mortgage in this situation.
If you are looking to move house and need a new mortgage or to port your existing mortgage to fund the purchase, call us today on 0151 662 0188 or email [email protected].
Whether you’re looking for a Free Automated Valuation, a mortgage offer, a price on insurance or advice on accessing business finance, we are here to help email us on [email protected] or call us on 0151 662 0188
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