When moving house, understanding how your mortgage deal works is essential to ensure a smooth transition. If you’re tied to a current mortgage, you may wonder whether it’s possible to break it early without facing heavy penalties. So, How does mortgage work when moving house In some cases, you might be able to transfer your mortgage deal to the new property, but other times, you may need to pay off the existing loan and secure a new one. Additionally, refinancing could help you secure a lower interest rate, making the process more financially favourable. Understanding these factors can help you make informed decisions when relocating.
What Happens to Your Existing Mortgage When You Move?
When you move home, your existing mortgage does not automatically end and must be handled carefully to avoid extra costs. In many cases, you’ll need to decide between transferring your mortgage or ending your current loan and arranging a new one. If you repay the loan early, your lender may apply an early repayment charge, especially if you are still within a fixed-rate period. Another option involves clearing the balance and mortgage and taking a new loan on the next property. If the new home costs more, additional borrowing may be required, subject to affordability checks. Understanding early repayment terms helps prevent delays and unnecessary expenses.
Can You Transfer or Port Your Mortgage to a New Property?
Yes, in some cases you can transfer or port your mortgage to a new property, but approval depends on your lender’s policies and your financial profile. Porting a mortgage allows you to move your existing home loan to your next property and keep your current interest rate, which can be valuable in a higher-rate market.
However, porting is not automatic and means you’ll still need to pass updated affordability checks and property valuation. If the new home is more expensive, you may need extra funds alongside the ported loan. When porting isn’t available, you may have to close your current mortgage early and consider taking out a new one, which can involve fees and revised terms. Understanding these options helps you choose the most cost-effective path.
Early Settlement Fees and Mortgage Exit Charges
When moving home, early settlement fees and mortgage exit charges can significantly affect your overall costs. If you close your mortgage before the agreed term, lenders apply early settlement fees to recover lost interest. These charges become relevant when selling your current property or switching lenders before the loan ends.
If you are upgrading to a more expensive property, you may choose to increase your mortgage instead of settling it fully, subject to bank approval. In such cases, lenders reassess affordability and may allow you to borrow more money under updated terms. Additional exit charges can include mortgage release fees, valuation costs, and administrative charges. Understanding these costs in advance helps you budget accurately and avoid unexpected financial pressure during your move.
How does mortgage work when moving house In Dubai?
When moving house in Dubai, understanding how the mortgage process works helps you plan costs, avoid delays, and choose the right financing option for your new home.
Mortgage Porting and Bank Approval
When moving house in Dubai, some lenders allow mortgage porting, meaning you can transfer your existing loan to a new property. This requires a fresh application, updated affordability checks, and a new property valuation before approval is granted.
Early Settlement and Property Transfer Costs
If porting is not available, you must settle your mortgage early. Dubai does not charge stamp duty, but buyers pay a transfer fee to the Dubai Land Department, along with bank release and settlement charges.
Choosing Between Different Mortgage Options
Buyers can choose from different mortgages, including fixed-rate, variable-rate, or Islamic home finance options. Your choice depends on income, interest rates, loan tenure, and long-term affordability when relocating within Dubai.
Insurance, Fees, and Compliance Requirements
Banks require updated insurance coverage on the new property, including life and home insurance. Additional costs may include valuation fees, processing charges, and legal documentation, all of which should be planned for early.
Mortgage Options When Moving to a More Expensive Home
When upgrading to a higher-value property, understanding your mortgage options helps you manage affordability and long-term costs effectively.
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You can apply to increase your existing mortgage if your income and credit profile meet lender requirements.
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Many lenders reassess affordability based on the new property value, loan term, and current market rates.
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Porting your existing mortgage may allow you to retain your current rate while borrowing additional funds.
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If porting is not available, refinancing with a new lender can provide competitive interest rates.
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Moving to a more expensive home may require a higher down payment to meet loan-to-value limits.
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Valuation and processing fees are usually higher for premium properties and should be budgeted in advance.
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Comparing lenders helps you choose a mortgage structure that supports long-term financial stability.
Should You Refinance or Get a New Mortgage When Moving?
When moving house, deciding whether to refinance or take a new mortgage depends on your financial goals and market conditions. Refinancing allows you to replace your current one with a new deal that may offer lower interest rates or better flexibility. This can help reduce monthly repayments, especially if lenders are offering competitive terms. However, refinancing often involves exit fees, valuation costs, and new application charges. Taking a new mortgage may be suitable if your existing lender does not allow porting or if you are changing loan types. Some borrowers also switch to a variable rate for more flexibility, though rates can fluctuate over time.
Final Words
So, How does mortgage work when moving house? The answer depends on several key factors, including your financial situation, the price of your new home, and your current mortgage lender’s policies. You’ll generally have a few main options: porting your existing mortgage, remortgaging with a new deal, or paying off your current mortgage if you’re downsizing.
Each option has its pros and cons, and the best choice will depend on your unique circumstances. Porting can help you retain your current rate, while remortgaging might offer better terms or flexibility. To avoid costly mistakes or delays, always consult with a qualified mortgage advisor. They can help you evaluate your options and guide you through the process efficiently. With the right advice and a clear plan, managing your mortgage when moving house can be a smooth and financially smart experience.
Frequently Asked Questions
Can I keep my current mortgage when I move home?
Yes, if your mortgage is portable and your lender approves the new property. The bank will reassess affordability, property valuation, and timing of the sale and purchase.
What fees do I pay if I sell a house with a mortgage in Dubai?
You may pay early settlement charges, bank release fees, valuation costs, and mortgage deregistration fees, depending on your lender’s policy.
Is it better to port or refinance a mortgage when moving?
Porting helps retain your existing interest rate, while refinancing may offer lower rates or better terms. The best option depends on fees, loan balance, and long-term savings.
Can I increase my mortgage amount when moving house?
Yes, if the new property is more expensive, you can apply for a top-up loan. Approval depends on income, credit profile, and the property valuation.