Your questions with answers on mortgage for moving home

Mortgage for moving home is a wholly different situation from the first-time mortgage. You know the basics of the procedures but moving your current mortgage to a new home demands the accumulation of further information. 

Many questions and doubts arise in your mind about how things are going to work if you shift to a new house. What will happen to your current mortgage and how things will take place? 

Here are all the essential and fundamental questions with their related answers to facilitate a better and smoother port. Make sure you follow the fundamental rules and stay disciplined in your monthly instalments. That is going to help you a lot while moving the mortgage to a new abode.

Question – What happens to my mortgage when I move home?

ANSWER – The current mortgage gets affected in every sense when you move it to a new home. Following things happen to it –

  • The lender demands for the home inspection report of the new home to know the actual value and the condition of the property
  • Once the report comes, in coordination with your solicitor/legal representative, the current mortgage is paid off completely.
  • Technically you have to start a new mortgage on the new property again. 

Question -What is the total cost of moving the mortgage?

ANSWER – The cost depends on the varied conditions as only that decides a final figure. 

If you have the same amount to borrow on the new mortgage –

  • Technically there is no cost
  • No arrangement fee
  • You only need to pay the valuation fee for the new house that can go up to £300 to £400

If the new home is higher in price and you need additional borrowing –

  • The essential cost – from £100 – £500 (some lenders do not charge anything)
  • Arrangement fee can be applied as the additional amount introduces a new and separate mortgage product.

If you are buying a home with a lower cost 

  • Basic cost taken by the lender – 1% -5% of the difference of the loan amount
  • Early repayment charge can apply to the difference that you are giving back to the lender.

For example – The current mortgage is £200,000, and for a new home, you need £1,70,000. The lender may charge 3% to 5% on the difference that is £30,000. If the lender takes 3%, the cost will be £900.

Question -What should I check to make sure that I make a safer move 

 

ANSWER – There are many things that you need to take care of. On many aspects you need to check if things are going well or not.

  • You need to take a look at all the penalty and charges that are included in the process
  • Consider the time factor. The procedure should not take much time
  • What impact moving the mortgage will leave on interest rate 
  • Ask if it will impact the tenure also

Question – Will I get mortgage payment holiday after moving to a new home?

ANSWER – This depends on many elements that come under consideration in comparison to the bigger picture. Normally following factors affect the decision. 

  • You need to spend a particular time in the new mortgage and that time varies depending on the lender. It can be one year or 6 months as the lender wants to know how you are doing with the new mortgage. 
  • If you have already taken the mortgage payment holiday in the previous one, the lender may not allow you the second time. It is more applicable in the case of the mortgage when you buy a property of the same value or a cheaper cost. If you buy a home with a higher price, the additional borrowing brings a new mortgage product and justifies the need for a mortgage payment holiday.

Both the situations on the mortgage for moving home respond differently depending on the lender and the mortgage deal. 

Question – What are the alternatives if moving the current mortgage is not a good option?

ANSWER – Yes, this may happen that due to the possible reasons, you may not find it right to move the current mortgage deal to the new home. 

The usual reasons that make the moving home mortgage less profitable are – 

  • You are not happy with the current interest rate policy of the lender
  • The lender is taking high repayment charges of paying off the current mortgage before moving to the new home

The alternatives are – 

  • Speak to the existing lender to offer something new and good – The existing lender may want to keep you due to its business and profit concerns. In that case, you should try to exploit the situation (of course, fairly) to get a better deal for moving to a new home. It is not uncommon, and many lenders and borrowers get into such kind of adjustments for mutual benefits. 
  • Consider remortgage for moving home with the new lender – You can move to a new lender to get a new deal that is less in interest rates and more flexible in repayment plans. However, for that, your payment record of the monthly instalments must be flawless. Also, the arrangement fee should not be high. The new mortgage provider should have the necessary additional features like insurance, payment holiday etc. 

If you find it challenging to find a good deal, take the help of a broker to help you find a suitable and lucrative offer. The available options like Shinemortgages.co.uk, John Charcol etc. are known to provide the best deals on mortgage, remortgage, moving home mortgage and everything related to property loans. 

Conclusion is…

The mortgage for moving home confronts many different situations. For some, it is even more complicated than the first time mortgage. However, in reality, if you keep an organised approach, you can make things happen properly. 

All the above questions and answers respond to fundamental doubts. The most important thing is to stay organised in your finances. If you are flawless on that part, whatever financial product you avail, you can always be on the safer side. 

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