Home Mover Mortgages
Some buy to let mortgages are not regulated by the Financial Conduct Authority
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Home Mover Mortgage
Joanne Markham and Kathryn Haycock explain mortgages for home movers.
What is a home mover mortgage?
It’s a mortgage for somebody who’s already a homeowner who’s looking to move to a new house. The rates will be the same for a remortgage or a home mover.
What is a mortgage in principle?
A mortgage in principle is the first stage in getting a new mortgage. It’s the same process whether you are a First Time Buyer or a next time buyer. It’s a short application form that we would submit to a specific lender. It confirms that you can borrow a specific amount.
That would give you the go ahead to start viewing properties. We would normally advise a client to do that once they’ve had a sale agreed on their property, so they’re good to go subject to any additional lender requirements post a full application.
How long does the mortgage application process take for a home mover?
How long is a piece of string? It depends on your lender, how busy they are and whether you’re using a mortgage broker or you’re trying to do it yourself. You’ve got to be organised with getting paperwork over to the broker or lender.
We can have them offered in as little as 24 hours. It could be a few weeks – it all depends on what the underwriters (decision makers) request. There are many different variations of a home mover mortgage in terms of deposit sizes, Loan to Values, whether you’re self-employed or employed. There are a lot of different things to take into account, hence the importance of seeing a broker.
What is the maximum amount that can be borrowed on a mortgage as a home mover?
The maximum amount would actually be up to 95% of the value of the property. You’re not penalised as a home mover – you could still get a new mortgage on a new property with just a 5% deposit.
What is the minimum deposit required for a home mover mortgage?
It’s 5%, but it all depends on credit scores. The lower the deposit, the higher risk you are. So if you want to borrow 95% of the property’s value and just put a 5% deposit down, you’re going to be classed as a higher risk.
It means you’ve got to tick some more boxes to pass the credit score. People with a recent missed payment or any blips can find they have issues with the majority of high street lenders.
The bigger the deposit, the smaller the Loan to Value, the easier it is.
What are the eligibility criteria for a mortgage as a home mover?
Again, it depends on the lender and the customer. We would work with a client to source a deal based on their individual circumstances.
It’s not really that you need to have three months in a job or x, y or z. Everything is based on that customer – we look for a specific deal for them. Obviously you do need to have a job. If you have good credit, you can get a mortgage with a 5% deposit. But any negatives on your credit file will be offset by a larger deposit.
With a self-employed customer you would need two years self-employed proof of income. But again certain lenders would allow one year’s proof. So it’s lender and customer specific.
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Can I get a mortgage as a home mover if I have bad credit?
We can almost always get you a mortgage. There are ‘sub prime’ lenders that will allow defaults, CCJs, missed mortgage payments or missed loan payments.
A missed mortgage payment is the big one – that’s probably the biggest stumbling block but there are potential lenders. So it’s very rare we can’t do it. However, higher risk clients do have higher interest rates and larger deposits.
What types of properties can be purchased as a home mover?
Any type of property can be purchased as a home mover – apart from sheds or part of a home. The type of property would be discussed with the broker prior to a full application to ensure there are no obvious concerns for a lender.
What is porting?
We do this quite often. With fixed rate deals you have ‘early repayment charges’. So if you decide to move house and leave your lender before the end of your deal, you’re going to face charges.
To avoid those we can port (transfer) that part of your mortgage over. If you were with say NatWest with a £100,000 mortgage, and you wanted to buy a bigger house and needed a further £50,000 borrowing. We could port £100,000 over to the new property and request a further advance with NatWest as a second part to the mortgage. That enables you to purchase the house that you want without paying an early repayment charge.
What are the interest rates for a mortgage as a home mover?
It’s hard to put a number down because the market at the moment is very volatile [podcast recorded in September 2023]. Rates are changing almost every day.
It is also very customer specific. The less deposit you have, the higher the interest rate. Credit history is a factor as well.
On the day that we apply for a mortgage the customer may not fit the affordability or other criteria for the best deal on the market. We generally wouldn’t really even look until they’re ready to submit a mortgage application on a specific property, because rates change every day.
What is the duration of a home mover mortgage?
The term can depend on your age. There is a maximum age, a maximum term and a minimum term and minimum age for every provider. Quite a few lenders now go to a 40 year mortgage term and some will offer you a mortgage up to age 80 or even 85.
I’ve just done a mortgage for a lady that’s using pension income and she can have a property on a repayment mortgage up to age 80. If you’re 50 now, then you’re looking at probably 25 to 30 years as a maximum term.
Some lenders want proof of your pension income over and above age 70 and there are a few caveats to it. It can get complicated, but 40 years is your maximum term if you are at the right age.
What are the fees associated with a mortgage as a home mover?
It’s the same as with any property purchase. Just like First Time Buyers, you can get fee-free remortgage deals or home mover deals, depending on the lender.
There are other fees associated with moving house – obviously the big one is your deposit which could be the equity from your sale. You’ve potentially got selling fees from the estate agent and solicitor fees for both buying and selling. You may have a valuation fee or a survey fee on the new property.
Also, depending on the value of the property there could be stamp duty to pay as well. The threshold at the minute is £250,000. If it’s under that there’s no stamp duty to pay.
What happens if I can’t keep up with repayments on my mortgage?
The last thing lenders ever want to do is take your house from you. That’s the absolute last resort. The first thing to do is to pick up the phone to your lender. Don’t bury your head in the sand – pick up the phone, explain the situation.
There are quite a few things they can do. It could affect your credit file, but it’s better than losing your property because you haven’t talked to them. They can extend your term to reduce your mortgage payments, or put it on interest only for a time.
There’s a new Mortgage Charter at the moment – clients can look into that and go direct to their lenders if they feel they do need help.
Can I get a mortgage as a home mover if I’m self-employed?
The short answer is yes. Generally lenders want two years’ proof of income, but some will take one year’s self-employed records.
Also if somebody has, for example, been in a job as a joiner on an employed basis, and then becomes self-employed, they would be considered more positively because they’ve got a track record in that line of work. We work with people in lots of different types of jobs but as a minimum you need 12 months’ self-employment records.
How does remortgaging work as a home mover?
It all depends whether you’re doing it yourself or whether you come to a broker like us to help you. That is easier – it’s what we do. Will you be porting your mortgage? Is that the right approach?
Your first port of call should be a broker – we do this sort of thing every day. It’s simple for us to do it and get your paperwork organised. We’ll go through that, see what your affordability is and find you the most suitable lender.
We might keep you with a certain lender because you’re currently on a fixed rate deal and you’ve got early repayment charges. If not, we will source for the most appropriate lender on the market for you. We use a lot of lenders. It’s a bit like putting all those lenders down a virtual street – we’re going in and out of them to get you the best deal. We take a lot of it out of your hands. We save you time and stress.
Say you’ve moved and you want to raise money to do some jobs on the house. You may not fit the criteria with your current lender for what you want to do. A broker can explore the market and find the best solution. It’s all tailor-made.
Can I get a Buy to Let mortgage as a home mover?
Yes, you can get a Buy to Let mortgage as a home mover but not on a property to live in yourself. If you were selling your house and buying something else, the property you buy would be on a residential mortgage.
But once you’ve moved house there’s nothing stopping you getting a Buy to Let mortgage on another property as an investment.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up with your mortgage repayments.
You may have to pay an early repayment charge to your existing lender if you remortgage.
The Financial Conduct Authority does not regulate most Buy to Let Mortgages.
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