When you’re thinking about moving home, one of the most important things on your to-do list is getting a new mortgage at a competitive rate.
But it’s likely you’ve already got a mortgage, and you’re many years away from paying it off – so what do you do?
Here at Crescent Mortgages, we’ve got over 28 years of experience in dealing with all kinds of moving situations, such as moving to a bigger house, choosing to downsize, or recently going self-employed.
We work to get you the right mortgage by scouring thousands of deals on the market. Based just outside of Bath in Trowbridge, Wiltshire, we can give you bespoke guidance on your next move – whether that’s local or nationwide.
(This guide is for those looking to move to a new property having already got themselves a mortgage. If you’re looking for a first-time buyer mortgage, don’t worry – we’ve got a comprehensive guide to help you navigate what can feel like a daunting process).
We asked Daniel and Kye what kind of mistakes they see with people trying to port mortgages, and they highlighted the case of one person who, when splitting up with his partner, was trying to sell their home and buy his own.
He was about to take out an extra mortgage on the current property to release equity and buy her out, which would have had financial implications further down the road.
He came to Crescent Mortgages to see if there was anything we could do, and luckily we were able to point him down the right path, telling him to wait until the house was sold and using that to give the equity, avoiding an expensive mistake:
“If he’d gone ahead, he’d have had to either pay the early repayment charge or port the mortgage,” says Daniel Pitman, director of Crescent Mortgages.
“But when you port and borrow more, you normally end up with two mortgages running out of sync: the one you’re porting, and the top-up, which doesn’t tie into the same scheme.
“In his case it would have been three mortgages out of sync: the original, the extra borrowing he was about to take out, and then more borrowing again when he actually moved. It would have been an absolute mess.”
Step One
Organise a call with us and we’ll discuss your needs and mortgage potential. We’ll also talk you through the process of selling your current property, help you calculate how much equity you have, and whether you should consider ‘porting’ your current mortgage to the new property.
We never rush this stage, taking the time necessary to get all the info we need to help you.
Step Two
Once we’ve got all the key details, we can quickly create a Mortgage in Principle (MIP), which is a certificate that shows whether you’re likely to be eligible for a mortgage.
That’s why we spend so much time getting the information we need from you – the MIP needs to be accurate so you know what you’ll be able to buy.
Step Three
After you’ve offered on a property and been accepted, it’s over to us to find you a great mortgage deal.
We already have all the information we need from you, and we’ll use that to sift out some of the best deals from thousands of lenders.
We’ll present you with our recommendation, finding the right mortgage deals that match with what you’re looking to pay each month.
Step Four
Once we’ve agreed on the right mortgage for you, we’ll just need a few more documents to start the application process, such as proof of identity, evidence of deposit, bank statements and proof of income – don’t worry, we’ll tell you all about this in our first call).
That’s all we need to start applying and doing the legwork to get you your perfect mortgage.
Step Five
At the same time as the mortgage application, you’ll also contact your solicitor (or conveyancer, as they’re commonly called when buying a house) – you might have one from when you last moved, or we can pick a trusted one from our panel.
Once you’ve engaged their services, they’ll head off and do the necessary checks and paperwork, and will liaise with the seller’s solicitor where needed.
Step Six
After the mortgage application is submitted, the lender will then do a valuation of the property to ensure it’s worth what you’re paying, and sometimes to check the basic condition of the property.
Step Seven
When the lender has completed their full assessment, signed off your documents and approved the new property, they’ll then issue your Mortgage Offer. This means the mortgage work is done, and it’s over to the Solicitors to oversee the rest of the purchase.
Step Eight
Consider getting a Survey. There are different levels, which can start at a few hundred pounds to well over £1000. It’s not mandatory, but it checks the building over and can uncover any hidden issues before you become the legal owner.
If you do find any surprises (such as repair work needed) you might renegotiate the price with the seller to offset the cost of the work, meaning the amount of mortgage you need might change.
Step Nine
The entire buying process in the UK takes around 4 months on average but this can vary depending on the seller or unexpected issues with the legal work – but once that’s done, it’s time for completion.
This is the exciting part – when contracts are exchanged and the deposit is paid, the mortgage funds are released by the lender, the keys are handed over and your new home is yours.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Porting your mortgage means transferring your existing deal to a new property with your current lender. The main reason people port is because they’re still tied into a mortgage scheme on their current property, which might have early repayment charges if the mortgage is closed early.
First of all, if you’re thinking of porting your old mortgage, you’ll need to find the original terms you agreed to, and see if porting is possible. (If you’re struggling with this – don’t worry, just come to us. We can solve it simply, and what’s more: the service is free).
Although you’re porting an existing mortgage, you’ll still need to go through the same affordability and credit checks as you would a new mortgage – as well as the lender doing a valuation on your new property.
There’s no guarantee that the lender will approve you for a new mortgage, as their criteria might have changed or your circumstances could have altered. So even if porting is allowed, you might not be accepted.
Yes. It’s common for people to require a bigger mortgage when they port, however, there may still be some problems to solve. If you’re moving to a larger house and you need to borrow more to upsize, you’ll need a ‘top-up’ mortgage on top of the ported balance. This top-up won’t be on the same mortgage scheme as the ported balance.
This means once you’ve purchased the new property, you’ll have two mortgages running alongside one another, with different rates and different end dates.
“If people end up with two mortgages running out of sync, we work out the best route for them to make it as tidy as possible (and save the most money),” says Kye Collier, director of Crescent Mortgages.
“We might place one mortgage on a flexible deal (with no early repayment charges) and put a note in the diary to tidy this up on a specific date in the future when the other part of the mortgage comes to an end, knitting it all together.”
If you’re downsizing, and don’t need to be borrowing as much money any more (and would like to reduce your monthly premiums) then beware of Early Repayment Charges (ERCs).
If you’re paying off part of your mortgage before your current deal has ended, then you could be liable for ERCs – which could run into the thousands, depending on how long you have left.
If you are going to have to pay out ERCs to move home, it might be worth checking out a new mortgage from a different lender, as you could save a lot of money on your monthly premiums.
At Crescent Mortgages, we handle all kinds of applications and can guide you through the process – with a laser focus on what will deliver you the perfect mortgage for your wallet and needs.
We’ve got a dedicated section around getting a self-employed mortgage, but we wanted to highlight a challenge you might face if you’re thinking about porting a mortgage and have recently started your own business.
The lender, when porting, will conduct another affordability assessment on you, and if you’ve recently gone self-employed and don’t have 2 years of profits to show, this can stop the porting process and force you to go with another lender (or may make it difficult to find a mortgage at all, if you’ve become self-employed within the last year).
We’re here to take you through this – we’ve dealt with many self-employed mortgages over the years, and can explain the options to you and the costs involved simply and without any broker fees.
Here’s the classic mortgage broker answer: it depends. And in this case, it depends on a number of factors.
Property prices may well have risen in your neighbourhood, and you’ll have paid off some of your mortgage. That means you’ll be bringing with you more money to put into a new house, and will therefore be able to afford something more expensive, or get a cheaper house with a smaller mortgage.
The general rule of thumb is: the less mortgage you need to buy a property (in relation to the overall value), the lower the interest rate will be.
Whether you’re porting your mortgage or taking out an entirely new deal, you’ll be subjected to the same affordability criteria as a new applicant.
This means your lender will assess your income and your outgoings to see whether the new purchase can be funded relatively comfortably.
If your income hasn’t risen with house prices, and you’re moving to a much bigger property (and need a bigger mortgage), then that might make you seem less attractive to lenders.
Stamp duty, or to give it its proper name, Stamp Duty Land Tax (SDLT) is the tax that the government charges for buying new property. You may have benefitted from discounts as a first time buyer previously, or been under a different scheme when you last changed homes.
Now, when you’re moving home, you’ll have to pay SDLT. There’s no tax on the first £125,000 of the property you’re buying, and then it jumps up through the bands as the cost of the property increases – from 2% after £125,000 to 12% over £1.5m.
If you want to calculate what your stamp duty will be – head over to our calculator! (Link here
One thing that can happen when moving home is that you might get stung with additional SDLT (Stamp Duty Land Tax) fees of a further 5%.
This happens if you’ve not sold your previous home on the day of completion for the new property, meaning you own two homes at once. It’s unusual, as most people will sell their current property and buy a new one simultaneously. We’ll talk you through how this works, and the solicitors will oversee the sale and purchase to ensure they complete at the same time.
If for any reason it’s not right for you to sell simultaneously, we’ll discuss if this is possible and the implications this will have on your new mortgage. You’ll have to pay an additional 5% SDLT, as the new place becomes a second home while you technically own two properties.
If the timings of selling your old place and buying a new one are not likely to align, then budgeting for this eventuality is a smart move.
However, the good news is that you can get this refunded when you do sell your old home, provided it’s within 36 months of buying the new place.
Early Repayment Charges (ERCs) are penalties from the lender for exiting the deal before the agreed end date.
These can be triggered if you’re unable to port your mortgage to the new property, or you want to lower the amount you’re borrowing and want to pay a lump sum early.
These costs can easily run into the thousands if you’ve decided to move a short amount of time after tying yourself into a new deal, and you’ll need to decide if you can afford the extra money it will cost on top of the other moving costs.
When thinking about moving home, and wanting to port your mortgage, if you go only to your lender, then their team is only going to focus on their deals.
When presented with options to stay with them, you might be reluctant to look elsewhere because you’re worried about high early repayment charges (ERCs), afraid you’ll lose the loyalty rate they might offer, or just can’t take the hassle of starting again with a new lender.
That’s why it’s important to use a mortgage broker. We only want to get the best deal for your circumstances, so we will look at thousands of rates across the spectrum available to you.
“Most of the time we get every lender’s best rates, and even the loyalty rates,” says Daniel.
When we present you with options, we’ll show you the total cost, taking into account monthly fees, any early repayment charges, or other hidden costs – and we don’t take a broker’s fee, meaning you pay less to take out a mortgage through us compared to other brokers.
So whether you want the most beneficial deal for the length of your mortgage, or just need monthly premiums to fit your budget, we’ll give you the options that fit so you can choose the right deal for you.
“So happy with Kye’s professional approach and guidance from start to finish! He makes you feel at ease with the process. Can’t thank my friend enough for recommending him!”
“Exceptional fee-free service. It has been a hassle-free and stress-free transaction. Dan was very helpful and patient in explaining and walking us through every step of our mortgage application.”
“Communication was brilliant from the start. Dan was friendly, professional and knowledgeable. He tracked the interest rate on my new mortgage deal and secured a lower rate before I was locked in, saving me considerable money.”
“The communication has been brilliant, every step and option available to us has been explained and Kye has been readily available for discussions and questions, which has made the whole process go very smoothly.”
“With my partner being self-employed, I was scared this would be a barrier to us getting a mortgage—no such thing as barriers with Kye and Crescent Mortgages! They made the whole process so simple.”
“Dan was thorough and explained everything in a way that was easy for us to understand as first-time buyers, without being patronising. His communication and manner were excellent, and he guided us through a slightly tricky requirement.”
Enter your income details to get an estimate of how much you may be able to borrow. It’s a quick way to understand your potential budget before exploring your mortgage options.
This is an estimate only and the amount you could borrow will depend on your circumstances and the lender’s criteria. Your outgoings, credit history, deposit and mortgage term may all affect the amount available.
The results shown are not a mortgage offer or a guarantee of lending. Your home may be repossessed if you do not keep up repayments on your mortgage.
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We’re here to talk you through any questions on the mortgage process, whether you’re thinking of remortgaging, ready to get a new deal, recently self-employed or a first-time buyer.
Email: info@crescentmortgages.co.uk
Phone: 01225 690 120
Monday – Friday: 9.00am – 5:30pm
Saturday: Closed
Sunday/Bank Holidays: Closed
