Buying a New HomeFree Mortgage Advice
Buying your new home
Where do I start?
The very first step in the process is to understand your options, how much you can borrow, the potential monthly payments and the value of properties you can afford. Our advisers can talk you through all this and more before you begin your house search.
Where we can help
Buying your next home can be a very exciting albeit daunting experience, which is why it is important to get advice as soon as you think about moving home. There are many different mortgage products to chose from so it is important to get the solution that best meets your needs.
To help you begin the process, we have put together our top tips for moving home, however please do call us to discuss your options in more detail:
Your home may be repossessed if you do not keep up repayments on your mortgage
I have a current mortgage, what are my options?
When you have an existing mortgage and are moving home, you generally have two options. You can either transfer your existing mortgage to the new property (this is called ‘porting’) or you can apply for a new deal with a different lender.
Which is the best option depends on a range of factors, include your existing deal and any potential early repayment charges you might have to pay.
What is porting?
Porting is where you transfer your existing mortgage debt and product to the new property you are purchasing. This enables you to avoid paying any Early Repayment Charges (ERCs) to your existing lender when you move.
If you are upsizing and need to increase your mortgage to finance this move, then we can speak to your existing lender and take additional borrowing on a separate mortgage on the new property. This will be done on a new mortgage product, so you will create two separate parts to your new mortgage debt with your lender. This is important to consider you may not necessarily get the best product, and it can have future impacts when you come to remortgage. This is something our experts will explain to you in much more detail.
It is important to be aware that you do not have the automatic right to transfer your mortgage to a new property, even if you do not wish to increase your borrowing. You will be required to go through their standard application process for all customers, and your application will be subject to their usual criteria. This includes passing the lenders credit check and affordability checks.
All banks require a first charge over your home as security for the money they are lending you, so you are only able to have one mortgage lender against one property. You are unable to port your mortgage and borrow the additional money you require from another mortgage lender.
Should I just apply with a different lender?
This is not a straight forward answer and there are many things to consider.
Your current deal may have Early Repayment Charges (ERCs) which you would be liable to pay if you sold your property and did not port your mortgage to your new home. However, your existing mortgage product may not be competitive, or your lender may be unable to offer you a suitable product for any additional amount you need to borrow.
Our experts will take into account absolutely everything to ensure you receive the most appropriate advice. This includes factoring in any ERCs you may have, looking at what your existing lender can offer and comparing this to the thousands of other products available.
I want to keep my home and rent this out, is this possible?
Absolutely. This scenario is called a ‘Let to Buy’ and is more common than you may think.
It does make the process a little more tricky as you will need to apply for two separate mortgages. A buy to let mortgage for your existing home to allow you to rent this out, and a new residential mortgage for the property you wish to purchase. Both mortgages can be processed in parallel with each other, with one set of documents being used to support both applications which can make the process less time consuming if done correctly.
Depending on the equity you have in your existing home, there may be scope to release some money to help with your deposit and stamp duty costs on the new property. Stamp duty is a very important consideration as you will most likely be liable to pay the additional rate of stamp duty on the new property you are purchasing.
The amount you might be able to borrow on the new property can also potentially be affected by keeping your current home, as some lenders will take this new buy to let mortgage payment into account when assessing affordability. Not all lenders will do this though, so receiving the right advice is critical when considering a let to buy to ensure you can purchase your new dream home.