Home move mortgages are for those looking to move house, either for more space, a better location or extra facilities. As families grow, or shrink, many will need a different home.
Low mortgage interest rates have encouraged many to ‘trade up’ to a better home. We actually see as many clients moving home as arranging remortgages on their existing home.
However, the mortgage market looks very different to how it appeared years ago when you took your current mortgage. The Regulator has brought in new rules to check affordability, limit interest-only loans ban self-certification mortgages.
There is a huge choice of mortgages available to those moving home. For example, many of our clients prefer the certainty of their mortgage payments by taking a fixed interest rate. A good number of these are for 5 years or more – which should see the effects of Brexit settling down!
What do you need to consider with home mover mortgages?
Here are some points for consideration to make sure you get it right:
- Your existing mortgage may have tied you in to a deal. We would check whether an ‘early repayment penalty’ applies if you pay the mortgage off and mortgage elsewhere. If so, it may be better to ‘port’ the deal to your new home. You can take a ‘top-up’ deal with the existing lender for any extra borrowing.
- Any top-up mortgage can be taken over a different term to the ‘ported’ amount. What is important is that we make the combined monthly payments easily affordable, both now and into the future.
- You will already have a track record of paying your existing mortgage on time. This helps your ‘credit score’ when lenders assess you for a new mortgage, improving your chances.
- You will be older than you were when you took out your current mortgage. How does this affect the term you can get for your new mortgage, which may be for a higher sum? Many mortgage lenders will lend to age 70 without the need to prove pension income. However, not all will do so. We can help you to find alternative options if your long term income suggests you could afford a longer term.
- If you ‘self-certified’ your income last time – forget doing that again. The Financial Conduct Authority now requires all lenders to thoroughly check income to meet affordability rules and guidelines. The previous use by some mortgage borrowers of dubious income declarations is now gone!
- The mortgage regulator, the Financial Conduct Authority, has also restricted lending on an interest-only basis. This where no capital is payable off the loan, and just interest is payable, keeping the debt constant. Whilst this is not necessarily a bad thing, many borrowers who are already on interest-only may be unable to afford a capital and interest loan. This in turn could restrict severely what they can buy. Many of these borrowers are known as ‘mortgage prisoners’ as a result. Again, we can advise on options including using one of the new ‘Retirement Interest-Only (RIO) Mortgages for older borrowers.
- In many home mover mortgage cases you may have a decent amount of equity in the home you have owned for a while. This means you can put down a larger deposit on your next home, and this will attract better interest rates. Again, we can guide you on whether putting down more money buys you an even better rate. It is also, of course, a chance to take some money out of the value of your home to spend as you wish. This can be useful if your new home needs some improvements or repairs.
- Even though house prices have been rising in recent years there is always the possibility the house you buy will be worth less than you paid for it when you come to sell next time around. If prices were to stagnate or fall in future, you need to consider whether the property you buy now would still be suitable for you if moving became difficult in the future.
- Anyone with a less than exemplary financial record will struggle even more. The specialist lenders who would previously consider those with an adverse credit history have largely disappeared from the market. Many of the ‘mainstream’ lenders will not take on those with even slightly impaired financial records. Any previous debt problems you had in the past can stick around on your credit records for up to 6 years! We recommend getting a free copy of your credit file from Experian or Equifax before starting to look for a mortgage. Request a copy using the ‘statutory report’ link on their home pages. Let us check the report you receive to be sure it won’t cause you a problem.
- Taking on a bigger mortgage will change your life assurance needs. We will provide you with advice, guidance and recommendations and then make the necessary arrangements for your protection.
We are well placed to find you the most suitable home mover mortgage given your particular circumstances. If you have set your sights too high, we will be honest and tell you so! But we will also tell you what to do to improve your chances later. We may not always be able to tell you what you want to hear, but we will always tell you what you need to know.
To arrange a no-obligation meeting at our expense to discuss your options, please use the ‘Contact Us’ form below.