Relocating to a new home is an exciting chapter in anyone’s life. However, it also comes with a host of questions and concerns, particularly surrounding your existing mortgage. If you’re considering a move and are wondering what happens to your mortgage when you relocate, this article will provide clarity on the various options and outcomes that may occur.
Transferring your mortgage
One option when moving is to transfer your existing mortgage to the new property, a process known as “porting.” This can be particularly advantageous if you have a competitive mortgage rate that you’d like to keep. However, it’s important to remember that not all mortgages are portable, so check with your lender to see if this option is available for your loan. Additionally, you may need to undergo a new affordability assessment, as your financial circumstances and property value may have changed since your initial mortgage application.
Paying off your mortgage
If you have the financial means to pay off your mortgage when you move, you can eliminate the debt and move forward with a clean slate. This option might be attractive if you’re downsizing or if your new home is less expensive than your current one. Keep in mind that paying off your mortgage early may come with prepayment penalties or fees, so it’s essential to factor these costs into your decision.
Applying for a new mortgage
In some cases, it may make more sense to apply for a new mortgage rather than transferring or paying off your current one. This might be the case if you’re moving to a more expensive property, or if you’ve found a better mortgage deal with another lender. Remember that applying for a new mortgage will likely involve a credit check, an affordability assessment, and potentially additional fees.
Renting out your current home
Another option to consider is renting out your current home and using the rental income to cover your existing mortgage payments. This can be a viable option if you’re moving for work or other temporary reasons and plan to return to your current property eventually. Before choosing this route, consult with your mortgage lender, as you may need to switch to a buy-to-let mortgage or obtain permission to rent out your home.
Selling your home
Lastly, you can sell your current home to pay off your existing mortgage. This is the most common option for homeowners looking to move. Proceeds from the sale can be used to pay off your mortgage balance, and any remaining equity can be applied towards the purchase of your new home. However, selling your home comes with costs, such as real estate agent fees and potential capital gains tax, so it’s important to consider these expenses when deciding whether to sell.
In summary, there are several options for handling your mortgage when you move, and the best choice will depend on your unique financial situation and goals. By understanding the possibilities and discussing them with your lender and mortgage advisor, you can make an informed decision that sets you up for success in your new home.