Mortgages for Home Movers
If you are planning on moving house or are in the process of doing so, you may require a home mover mortgage. Moving house is a great opportunity to reconsider your current mortgage and look for a better deal, whether you are looking to move to a different location or step up the property ladder and increase the size of your home loan.
A home mover mortgage is no different to a standard mortgage. It’s simply the process of getting a new mortgage when you move house so the mortgage is suitable for the house you’re moving into. Getting the right mortgage is crucial as you will need to ensure it is still affordable whilst suiting your changing needs.
Changing your mortgage when you move house rather than transferring the current one over, can help to better suit your new circumstances and get you a better deal, particularly if you’re hoping to increase the size of your loan.
How much can I borrow?
It’s a good idea to work out roughly how much you can borrow before you go house hunting. There is no point in picking your ideal home only to find that it is beyond your financial reach. Our advisers will happily help you work out what your budget is on the first call.
In the past, lenders traditionally calculated the amount you could borrow as a multiple of your salary. So, you might typically be granted a mortgage of three or four times your gross annual earnings. But most banks and building societies these days advance funds according to affordability and will ask for details of your incomings and outgoings before they decide on a figure. They will also take into account the impact of future interest rate rises.
Using equity for a deposit
You will almost certainly have to use some of your equity because the days of a 100% mortgage are gone. Some banks and building societies will lend up to 95% of the property’s value – this will be described as the loan to value of LTV. In other words, you will need a minimum deposit of 5%. You will have a wider choice if you can put down a 10% deposit. However, the very best rates are reserved for borrowers with a big deposit – in some cases you’ll need as much as 40%.
Therefore, aim to save as large a deposit as possible because you will have access to a wider range of mortgage products and be able to benefit from more competitive rates.
Fees for home movers
Don’t forget to factor fees into your cost calculations. Most lenders charge an arrangement fee for your mortgage, which could be £1,000 or more (which can be added to the mortgage, however this is not always recommended). Some also levy a non-refundable booking fee of several hundred pounds.
Also, don’t forget the other fees and costs associated with buying a home – you’ll have to pay for a survey and for the conveyancing. Then of course, there’s the cost of furnishing your first home. It can all mount up pretty quickly.