Moving house is often an exciting time, but it can also be stressful and a little overwhelming.
If you’re currently planning the big move, you might wonder whether you should apply for a new mortgage or take your old one with you.
Well, while many lenders do offer “portable” mortgages, the reality is that it’s sometimes a bit more complicated than just moving both house and mortgage seamlessly.
Is it portable?
First of all you should check the terms of your agreement or speak to your mortgage provider directly to find out whether the deal is portable. If you find that it is, you should – in theory – be able to move your mortgage over to your new home.
However, in order to port your mortgage you’ll have to reapply, which means you’ll face the same stringent affordability checks (introduced following the April 2014 Mortgage Market Review (MMR)) that you’d face if applying for a new one. So it’s a good idea to reign in your spending and – if possible – clear any outstanding credit card or loan balances first, just as you should try to do before making any new application for credit.
If you applied for your current mortgage before the MMR was published, you may not be familiar with these stricter checks. Essentially, lenders want to be reassured that you won’t have any issues making your monthly mortgage payments, even if your circumstances change. There are many ways to prepare your finances before making your application, but the key points are getting any debts you have under control and clawing back any spending on non-essentials around three to six months before you apply. You can find out more about how to tidy up your finances here.
Your lender will also carry out a credit check when you make an application, so if your credit history has slipped since you applied for your current mortgage, you may have some work to do beforehand. If you’re unsure, you can check your credit history using free services ClearScore and Noddle.
Weighing up the savings and potential costs
Whether or not you decide to port your mortgage will depend on a whole host of factors, but the deciding one will probably be whether or not doing so will be cheaper than finding a new deal. Try and look on comparison websites to see some of the current mortgage deals on the market and whether they beat your existing one – but do bear in mind that you may not receive the exact interest rate advertised.
If you decide you want to leave your current mortgage and take out a new one before your existing deal ends, there’s a chance you’ll have to pay an early repayment charge or an exit fee to do so. To make sure it’s worth leaving, you’ll have to work out whether the money you’ll save with your new mortgage is more than you’ll have to pay to exit your current one. Remember, although exiting may be more expensive in the short-term, doing so might save you a considerable sum over the course of the new mortgage term.
If you’re struggling to come to a decision at this point, you might find it worthwhile speaking to a mortgage broker like Ocean. Our specially trained mortgage advisors can offer you personalised advice and may help you find a new deal suited to your circumstances.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.