We understand that navigating the financial aspects of moving home can be complex. Beyond finding your dream property, it’s essential to consider how your existing mortgage and accumulated equity will factor into your next move. Let’s explore some key points to help you feel confident and informed.

Equity is your property value minus your mortgage balance. This becomes your deposit. The larger the deposit, the lower the risk to the lender, and therefore typically the lower the rate that is available to you.

Once you’ve established how much equity you have in your property, you’ll then need to consider what fees need to be paid from this and whether you have any savings to cover some or all of these fees. Fees to prepare for are things like Estate Agent fees, solicitor fees, stamp duty, moving costs, mortgage product fees and any broker fees.

Leaving a fixed deal early may incur a percentage-based charge. Sometimes, particularly if you’re downsizing, paying this charge isn’t avoidable. Some lenders give you an allowance of how much you can pay off before you’re charged, known as an overpayment allowance.  Each lender has a different structure, so it’s important to review your mortgage illustration to see what this might cost. This is a potential cost that might need to be factored into your deposit calculations.

Some mortgage products have a feature known as Porting. Porting is where you retain your existing mortgage arrangements and transfer them from your existing property onto your new one. Doing so can help avoid Early Repayment Charges however depending on the rate being offered, switching to another lender might give better options and better rates. Getting advice on what you do is important, particularly if there are potential charges involved by switching to a new lender.

Once you know how much of deposit you have, you’ll then be able to understand your borrowing requirements. You may need to increase your mortgage amount if you’re upsizing, or decrease borrowing if you’re downsizing. If you’re in a fixed deal with your lender and are looking to port your mortgage, any additional borrowing you need may have to be raised on an additional mortgage account with your existing lender, being placed on their current mortgage deals. If you’re downsizing and reducing your mortgage balance, Early Repayment Charges may apply.

Coordinating the sale of your existing property and the purchase of your new one impacts costs and stress. Before you have an offer on your new property accepted, you’ll likely need an offer accepted on your existing property first. This evidences you’re in a proceedable position. Sometimes there can be flexibility here, where you have savings to cover the deposit and fees or intend to rent out your existing property, known as Let to Buy. Your existing mortgage will need to be calculated within your affordability for the new mortgage and there could be additional stamp duty payable as you’ll own more than one property on completion.

Mortgages are big commitments and it’s important to understand that your home may be repossessed if you don’t keep up with the repayments on your mortgage. Therefore, getting advice early helps you understand your budget, your needs and circumstances, and what options are available to you, particularly where there is an existing mortgage involved. Getting advice tailored to your needs can help you move forward with confidence.

Cantell & Co and The Surrey Mortgage Company Limited are two separate entities. The Surrey Mortgage Company Limited provides mortgage and insurance advice only