Options to move house during a fixed rate mortgage period

If you’ve signed up to a two-year, five-year or an even longer fixed rate mortgage period, you may want to know if you are able to move house before the offer ends. Circumstances can change, and even during a shorter fixed rate period you may find you either need or want to move. Fortunately, there are usually options available to you.

Porting your mortgage

Many mortgages will come with option to transfer it to a new property. This is known as ‘porting’ your mortgage. You should be able to check this on your existing mortgage documentation, or by speaking to a mortgage broker or your lender. Whilst this is a good option to have available there are a few things to consider.

If you are looking to move to a more expensive property, you will only be able to port the value of your existing mortgage. If you need to borrow more money, you will have to apply to your current lender for an increase to your mortgage. This will be assessed in the same way as a new mortgage, with affordability checks looking at your income and expenditure. If you stretched yourself initially, and there has been no significant change to your financial situation, your lender may be unwilling to increase its lending to you. If you’ve had a pay rise or cleared some credit commitments, you may now be able to borrow more.

Conversely, if you are looking to move to a less expensive property and reduce the value of your mortgage, you are likely to have to pay a penalty. This is known as an ‘early repayment charge,’ details of which can again be found on your mortgage documentation or by speaking to a mortgage broker or your lender. This charge is usually a set percentage of the mortgage amount and would only apply to the difference between the current and reduced amount.

For example, if you were reducing your mortgage from £200,000 to £125,000, and you had a 2% early repayment charge, you would pay a 2% charge on the £75,000 reduction, so £1,500. Many mortgages allow overpayments, which may reduce this figure, so it’s worth speaking to an expert to understand your specific circumstances.

Whether you are looking to increase or decrease your mortgage, it is also important to remember that your lender will also assess the new property to confirm it is suitable as security. This is the same process for any new mortgage, and will involve a valuation by the lender.

Ending your mortgage early

In addition to paying an early repayment charge for reducing your mortgage, you should also have the option to pay a charge on the entire amount and apply for a brand-new mortgage. Early repayment charges often taper during the offer period, so may start at 3% in the first year of the fixed rate, but reduce to 1% in the final year, so it can become more feasible the closer you are the end of your offer.

Paying the early repayment charge needs to be carefully considered as it is likely cost you hundreds or even thousands of pounds. However, there are circumstances where it may be the right choice, for example if the wider selection of lenders will allow you to access a better offer, if you believe interest rates will increase significantly before your current mortgage ends, or if it is essential you move home but your existing lender isn’t prepared to increase your mortgage when another lender will.

A mortgage broker with access to a wide range of lenders will be able to help you navigate this decision and calculate the costs involved so you are fully informed. If you’d like to understand more about your current position, including what you might be able to afford to borrow whether that’s now or in the future, please get in touch and we’ll be happy to help.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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