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 favorable. Understanding these factors can help you make informed decisions when relocating.
How does mortgage work when moving house In Dubai?
When moving house in Dubai, the process of handling your mortgage can vary depending on your situation. If you’re looking to transfer your current mortgage to the new property, this might be possible, but it’s essential to check with your lender about the terms. Alternatively, you may opt for taking out a new one if your current mortgage isn’t transferable or if it no longer suits your financial needs. Some homeowners choose to increase their mortgage to accommodate the new home’s price, especially if property values have risen since they first purchased. If your current mortgage has a variable rate, it’s also important to assess whether it will remain competitive when applying for a new loan. Understanding your options, including early repayment fees and additional charges, is crucial to ensure that the transition to your new home is as smooth and cost-effective as possible.
What will happen to my mortgage when I move home?
If you’re not a first-time buyer, chances are you’re still repaying an existing mortgage. So what happens to it? Here’s a helpful comparison table to explain your choices:
| Option | Description | Best For |
| Porting Your Mortgage | Transfer your current mortgage to your new home. | Those with a favorable interest rate. |
| Remortgaging | End your current deal and start a new mortgage. | Those wanting better terms or a new lender. |
| Paying Off Mortgage | Sell current property and clear the balance in full. | Downsizers with sufficient equity. |
| Let-to-Buy | Rent out your current home and buy another with a new mortgage. | Property investors or temporary relocators. |
What to check and know before applying
- Not all mortgages are portable – Some deals, especially older or discounted rates, don’t include the option to port. Check your agreement or speak with your lender.
- You must complete the sale and purchase within a specific timeframe – Lenders usually require both transactions to happen close together—often within 30 to 90 days—to honor the ported terms.
- You might still pay arrangement or valuation fees – While porting can save on exit charges, standard fees like application, legal, or valuation costs may still apply.
Can I Port My Mortgage to a More Expensive Property?
Yes, you can port your mortgage to a more expensive property, but there are several factors to consider. If the new home exceeds the value of your current one, you may need to increase your mortgage to cover the difference. This additional borrowing could come with a new interest rate, which may be higher. The good news is that you won’t have to apply for a completely new mortgage, but you will undergo a full affordability assessment, including a review of your income, debts, and credit score. Be prepared for potential early repayment charges on your existing loan if you’re changing the terms or paying off part of it early. Additionally, there may be legal, arrangement, or valuation fees associated with the move.
Example:
Suppose your current mortgage is £200,000 at a 2.5% fixed rate. You want to move to a property worth £300,000. Your lender might allow you to port the existing mortgage and top it up with a new £100,000 loan, possibly at a higher rate.
So, while porting a mortgage to a more expensive property is possible, make sure the blended rate (combined interest on both parts) is still competitive overall.
How can I protect my credit rating when I move house?
When moving house, it’s crucial to protect your credit rating to ensure a smooth transition and secure favorable loan terms. Here are three essential steps to safeguard your credit score:
Keep Your Current Mortgage Deal
If possible, keep your current mortgage deal when moving, especially if you have a favorable interest rate. Transferring it to your new property can minimize the impact on your credit score. If you need to change your mortgage, be aware that different mortgages may have different terms.
Don’t Miss Any Payments
During the moving process, make sure to stay on top of your payments, whether it’s your current mortgage or other bills. Missed payments can negatively affect your credit score and make it harder to secure favorable terms, especially if you’re moving to a more expensive property.
Monitor Your Credit Report
Before and after the move, check your credit report regularly. If you’re moving to a more expensive property and increasing your mortgage, you’ll need to ensure your credit score remains strong. Keep track of any changes, and address any discrepancies quickly.
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.
FAQs
Should I port or remortgage?
Choosing between porting and remortgaging depends on your financial situation. Porting allows you to keep your current mortgage terms, including the current interest rate, but it might come with exit fees or additional borrowing if the new property costs more. On the other hand, remortgaging can offer better rates or more flexibility but may involve changing your terms entirely. It’s important to compare both options to determine which will reduce your monthly payments or suit your needs.
Can I get a new mortgage with a different provider when I move home?
Yes, you can get a new mortgage with a different provider when you move. This means you’ll be taking out a new mortgage altogether, potentially at a different rate and term. Make sure to compare rates, fees, and offers from various lenders to secure the best deal. Changing providers could also be beneficial if your current provider’s terms no longer meet your needs.
How can I improve my chances of getting credit to move house?
To improve your chances of getting credit, ensure your credit score is healthy by paying bills on time and reducing any outstanding debts. Also, consider saving for a larger deposit, as this could increase your appeal to lenders. Reducing your existing debt before applying for a mortgage will help as well. Insurance and current mortgage commitments should be considered, as lenders will assess these when making their decision.
How will moving house affect my finances and credit score?
Moving house can impact your finances and credit score depending on how you manage the transition. If you end up breaking your current mortgage early or taking on more debt, it could negatively affect your credit score. However, maintaining regular payments, managing your debt effectively, and comparing mortgage deals can help maintain or even improve your score.
Can I move my existing mortgage to a different house?
Yes, you can move your existing mortgage to a different house by porting it, provided your lender offers this option. If your new property costs more than your current mortgage allows, you may need to borrow the difference, which could involve exit fees or a change in terms. Always compare the terms of your existing mortgage with new offers before making a decision.