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Home Mover Mortgages
Michelle Strelley talks us through the home moving process and what it means for mortgages. Podcast recorded in October 2023.
What is a home mover mortgage?
It’s where somebody already has a mortgage, having been a First Time Buyer previously or after moving before. They are thinking about moving house – they want to get a mortgage on a new property. They might wish to take the mortgage they’ve got with them or start a brand new mortgage on the next property.
What is an Agreement in Principle and how do I get one as a home mover?
An Agreement in Principle is a document which basically says how much you can borrow from a specific lender. It may be based on you going online with a lender and putting in some figures – normally income and outgoings. Or, you’ve spoken to a broker and they’ve done it.
Most lenders do a soft search on your credit file to see if they would be happy to lend to you based on the information given. It’s a quick peek at your credit history. A couple of lenders do a hard search at Mortgage in Principle stage.
You can take the document to an estate agent to confirm you have spoken to someone or been online and this is how much you can borrow.
An Agreement in Principle is the same as a Decision in Principle and Mortgage in Principle – they are all different terms for the same thing.
How long does the mortgage application process take for a home mover?
It depends on a lender’s timescale. It can be really quick if it’s quite a simple case with no additional income sources and no credit issues.
In that case the turnaround might be a week, or it could be longer depending on the lender’s timescales and how complicated the case is. Check if your broker can do anything to help speed it up. We will be able to let you know the service levels of the lender concerned before you apply.
What is the maximum amount that can be borrowed on a mortgage as a home mover?
It’s dependent on people’s income, outgoings and credit history, so the borrowing amount is unique for each individual.
What is the minimum deposit required for a home mover?
It’s usually 5% to 10% at the moment. It’s worth checking to see if there’s any movement on that. In some situations you may have to put more in, depending on your credit history.
What are the eligibility criteria for a mortgage as a home mover?
Much the same as with First Time Buyers, you have to be a certain age and have a minimum income – with some lenders that’ll be £20,000. Some are less, some are a bit more.
Some lenders have a minimum criteria for credit history and every lender is completely different. So it’s always worth checking with a broker.
Can I get a mortgage as a home mover if I have bad credit?
The short answer is yes, but the long answer is that it depends on what’s actually caused the bad credit. Some things are an absolute no-no, such as recent mortgage arrears.
If you have had bad credit, get a copy of your credit report and send it to a broker to look at. Some high street lenders will take some slight adverse credit, but there are some non-high street, more adverse focused lenders who lend in all sorts of weird and wonderful circumstances. It’s definitely worth checking.
What types of properties can be purchased as a home mover?
Most types of properties out there are acceptable. There’s all sorts of construction types and in most cases, there are lenders who will mortgage them, depending on the age, condition and if repairs have been done.
Where I am, there are a lot of steel properties, for example, and they need to be in a certain condition and meet set criteria.
What is porting?
Porting is where you take your current interest rate on your mortgage to a new property. For example, if somebody was on a five year fixed rate and they wanted to port, they would take. that rate to their next property.
It is always subject to criteria, affordability and valuation on the new property but in most cases, when you get your mortgage offer there’ll be details in your documents about porting. It’s a feature that means that you don’t have to come out of your mortgage and pay early repayment charges. It is especially helpful at the moment with interest rates not being as low as they were.
People can still benefit from lower rates if they have them. If you need to borrow more, you take the existing balance with you at the same rate, and then top up the difference on whatever interest rate the lender is offering at the time.
What is the duration of a home mover mortgage?
Most lenders tend to cap at age 70 or 75 for working income but there are exceptions to that. Some lenders will go longer into retirement. It’s just dependent on your circumstances and what income you’re going to have at that point.
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What are the fees associated with a mortgage as a home mover?
If you are a home mover, then in most cases you will have a house to sell as well, which means estate agents fees. These vary area to area, so it’s worth speaking to an estate agent about that. Stamp duty is a big one that we need to consider.
The lender might have some fees if you were to pick a new rate and you weren’t porting. There are also solicitors fees – it’s worth getting quotes for those. If you are buying and selling you need solicitors for each process.
If you’re using a financial adviser or mortgage broker, they may also have fees.
What happens if I can’t keep up with repayments on my mortgage as a home mover?
If you are running into difficulty, speak to the lender as soon as possible. You don’t want to default on your mortgage, and the lender may be able to help you. There’s a new Mortgage Charter that may enable you to switch to interest only for six months [podcast recorded in October 2023] but that may change.
I would always recommend you speak to the lender. If you continue to not pay, eventually it may end up in repossession. It’s a horrible word and it’s not something we like to think about, so we try to avoid it as much as possible.
Talk to the lender and Citizens Advice – if you are in financial difficulty, reaching out to agencies that can help you is the first move.
Can I get a mortgage as a home mover if I’m self-employed?
Yes, in most cases. With over half the lenders you would need at least two years’ accounts be those self-assessed or by an accountant. Some lenders accept one year.
If you’re self-employed, seek advice, whether you’re a sole trader, partnership or limited company director. If you own over 25% of the business, most owners will consider you to be self-employed. It’s worth speaking to a broker about the paperwork you need to send.
How does remortgaging work as a home mover?
It’s the same as for a First Time Buyer. When you come to the end of your fixed rate period, you can see what your existing lender is offering at the time. Come to a broker or do some research yourself on what rates are out there.
Again, what you can get depends on affordability, credit history, employment. You can also remortgage to borrow more, to pay more of the mortgage off or extend your term. You can make all sorts of changes when you remortgage.
Can I get a Buy to Let mortgage as a home mover?
Yes, although that’s subject to criteria – and we’re going to do another podcast on that. But in theory, you can.
If you have any questions or are unsure about anything, reach out to your financial advisor or broker because we really can help.
Think carefully before securing other debts against your home.
You may have to pay an early repayment charge to your existing lender if you remortgage.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP WITH YOUR MORTGAGE REPAYMENTS.
The Financial Conduct Authority does not regulate most Buy to Let Mortgages.
Approved by The Openwork Partnership on 02/02/2024.
