Moving on? Then it's time to compare next-time buyer mortgages
Compare next-time buyer mortgages if you’re a second-time or third-time buyer and looking to move along the property ladder.
Key points
- If you’re a homeowner moving house, you’ll probably need to settle the mortgage on your existing home and arrange a mortgage for the next property you’re buying
- An alternative may be to port your existing mortgage to your new property – that might be more cost effective if you’re subject to early repayment fees
- Consider chatting with a mortgage adviser to find the right next-time buyer mortgage
Just because you’ve already done the first-time buyer thing already doesn’t mean that your next home move and accompanying next-time buyer mortgage application is any less daunting – it’s still one of the biggest commitments you’ll likely ever make.
Next-time buyer mortgages can feel twice as complicated. After all, you’ve got to deal with selling your home and tying up your existing mortgage, as well as sorting out a new mortgage on the property you want to move to.
Changing mortgages when you buy your next home
Planning on moving home soon? Well, your first step should be to check the terms of your existing mortgage.
While your circumstances might not have changed, your mortgage provider’s lending criteria may have gotten stricter, and house prices have risen 3.1% between July 2017 and July 2018.†
This, coupled with more in-depth affordability checks, might mean you can’t borrow quite as much as you did before.
This can be frustrating for buyers looking to move up the property ladder, but having some savings in place for the move should cover any shortfall in what you can borrow.
How to get a next-time buyer mortgage
As a first step, check your latest mortgage statement to see how much equity you’ve got in your current home.
Next, consider contacting a mortgage adviser to get an idea of how much you might be able to borrow on top of this, or try using a free and unbiased comparison site like MortgageGym.
If you compare next-time buyer mortgages with MortgageGym, you can check your eligibility without impacting your credit score.
When to apply
You can usually reserve your next mortgage up to six months in advance of moving, so you might want to consider this to give yourself enough time to sort everything out.
You don’t want to be the person holding up the house-buying chain because your next mortgage hasn’t been approved yet…
Porting your mortgage
Your existing mortgage may have come with an introductory deal, such as a fixed-rate period or a tracker-rate period. If this is at an end and you’re currently paying your lender’s standard variable rate, then you should able to move to another deal without penalty.
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However, if you're currently locked into a mortgage deal you'll need to check whether you’re liable for any early repayment charges, as these can cost thousands of pounds.
If you are still in an initial term, you may still be able to move and take your existing mortgage with you to your new property without paying early repayment charges. This is known as porting your mortgage.
However, porting a mortgage isn’t always simple. You'll effectively have to reapply for the mortgage, so the lender will need to see your bank statements – as well as proof of income – all over again.
Your mortgage provider’s lending criteria might have also have gotten stricter, meaning you might not be able to borrow as much and port your mortgage.
You should also bear in mind that if you need to borrow more than your existing mortgage, then this top-up amount will probably be at a different rate of interest.
A mortgage adviser (like the ones at MortgageGym) can help you work out the most cost-effective options, so it's well worth seeking advice when planning your move.
Moving home costs
Remember that, as well as conveyancing and survey costs for your new property, you'll also have to pay these costs on the home you’re selling.
Don’t forget to include the cost of removals – get at least three different quotes from removal companies so you can get an average cost and leverage to bargain.
You'll need to complete a form about the fixtures and fittings in your current property, and your conveyancer will also have to get copies of your Land Registry title deeds.
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Providing all goes according to plan, your buyer will then pay a deposit – the lowest amount is usually 5% of the sale price – when contracts are exchanged.
When the sale's completed, the buyer will pay the full cost of the property and your conveyancer will hand over the title deeds to their conveyancer.
If the property you're moving to is more expensive than your existing property, requiring you to take out a larger mortgage, you may want to consider arranging additional life insurance to cover the extra borrowing.
If you need personalised advice, talk to a mortgage adviser, and if you’re worried about debt, seek help from charities like StepChange, National Debtline or Citizens Advice.†