Moving home is a really exciting time. There’s so much to do and think about, so when’s the right time to speak to a mortgage adviser? Here at Mortgage Advice Bureau, we’d say the sooner, the better. Here’s why.
You need to know how much you can borrow
Knowing how much you can borrow before you start in the house hunt will save you a lot of time looking at properties that don’t match your financial circumstances. Whether you can borrow a little more than you thought or perhaps less than you thought, it’s still good information to be armed with before you start seeing what’s on the market and booking viewings.
Even if you have an existing mortgage on your current property, it doesn’t mean you will be able to borrow the same amount again. Your financial circumstances may have changed since you took your last mortgage, so your borrowing amount if you move could be higher or lower. Maybe your current mortgage provider may not be willing to lend you any more money, but a new provider might. It will also depend on other factors such as the value of the new property.
You need a decision in principle
Your Decision in Principle (also known as Agreement in Principle) is basically a certificate from the mortgage lender that confirms they would, in principle, be willing to lend the borrower (you) a particular amount of money, based on some very basic information. This isn’t your mortgage agreement, and the mortgage lender doesn’t have to proceed with the mortgage based on this alone, but it will often be requested by the estate agent when you have an offer accepted on a property you would like to buy.
You need to know what happens to your current mortgage
There are so many different mortgage products and options that you need to understand about what happens to your existing mortgage when you want to move.
You can repay your existing mortgage and take a new one on the new property. Your adviser may be able to find you a cheaper, more suitable mortgage product for your new property. Your adviser will make you aware of any fees that this may involve, as there may be early repayment penalties on your existing mortgage.
Some mortgages are portable, which means you can transfer the existing mortgage product to the new property. This is particularly relevant if you have a fantastic mortgage interest rate that you don’t want to lose, or you’re still within a fixed rate period and would incur significant penalties if you repaid in order to remortgage, but there are still likely to be fees involved for you to port the mortgage to the new property.
You need to know what fees may be involved
We’ve already mentioned early repayment fees or fees to port your mortgage, but there could be other fees associated with setting up a new mortgage such as new product fees. Your lender will also request a valuation be carried out on the new property before they will agree to mortgage it, and in most cases you’ll pay a fee for this valuation too.
Mortgage fees aside, your adviser will be able to give you some guidance on other fees and costs associated with moving home that you may not have yet considered, such as solicitors and estate agents fees. If you haven’t factored these in yet, this could affect what is left as deposit or how much you need to borrow.