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Moving home mortgages

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What is a home mover mortgage?

Home mover mortgages are loans designed for existing homeowners who are buying a new property to move into. For instance, people relocating, moving up the property ladder, or even downsizing. They are not suitable for first-time buyers or people who are remortgaging. 

Home movers are also known as second-time buyers for mortgage purposes, although they may have bought a home more than twice. According to the latest mortgage statistics, home-movers accounted for 29.3% of all gross mortgage advances in 2022, more than any other categories.

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What mortgage options are available for people moving home?

Porting your mortgage

You don’t always need a new mortgage when you’re moving. Many mortgages are “portable”, meaning you can take your deal with you. Porting is popular because you don’t have to pay early repayment charges (ERCs) or shop around for a new mortgage offer.

You’ll still have to go through affordability checks, though, and your lender will want to carry out a valuation of your new property, so it’s not guaranteed that you’ll be able to keep your current mortgage offer.

Home mover mortgage

If you can’t keep your existing mortgage or found a better deal elsewhere, you may wish to take out a home mover mortgage for your new property. This could be with your current lender or a different one. The new mortgage will pay off your existing loan. 

You’ll usually have to pay early repayment charges (ERCs) if you’re on a fixed or variable-rate mortgage deal. So, check how much you’ll have to pay to move, then see whether you really will save by switching mortgages. 

Can I move house without changing my mortgage?

Porting your mortgage is a way to move home without changing your mortgage, as you are able to transfer your existing deal to your new property. However, it’s worth noting that you will effectively have to re-apply for the same mortgage again, as affordability and credit checks so the lender, as well as checks on the new property. 

This means that you can be turned down when requesting to port your mortgage, especially if you’re taking on a more costly property, and/or your income has decreased since taking out your original mortgage. This doesn’t necessarily mean that you wouldn’t be accepted by another lender with different criteria, but it does mean that you would need to change your mortgage to move house, even if that isn’t your preference.

Porting your mortgage is particularly helpful for avoiding any ERCs, as you wouldn’t need to leave your current mortgage before the term is up. It also typically allows you to keep the interest rate that you locked in when you bought your home, which in most cases, will be more competitive than those available in the current market. You also avoid paying the other costs associated with remortgaging, such as product or arrangement fees.

Upsizing

If you’re buying a more expensive home, you may need to increase your mortgage to do so. 

However, if the value of your current home has increased since you bought it, you will have more equity in your property. You may also have paid off some of the loan, increasing your equity further. You can use this towards the new home.

When you look at your new, bigger property, you need to consider what your loan-to-value or LTV will be. This may be higher, because the property is more expensive, or it may be lower thanks to extra equity. The lower your LTV – the better the deals you’ll be offered. 

You can either borrow the extra from your existing lender or take out a new mortgage for the whole amount. If you’re thinking of switching, check what ERCs you’ll have to pay.

Downsizing

If you’re buying a less expensive property but wish to keep your mortgage the same size, your LTV will increase. This is because the loan will be a bigger proportion of the property. For instance, a £70,000 mortgage on a £140,000 property is 50%. If you took a £70,000 mortgage on a smaller £100,000 property the LTV would be 70%.

Because of this, the lender might not be happy to port your existing mortgage or want you to repay some of it to keep the LTV the same. 

You may need to take out a new mortgage, which could mean paying ERCs. However, you could also reduce the size of your mortgage to pay less each month at the same time, so it could be cheaper overall.  

Using your equity as a deposit

Equity is the value of your home that you own compared to its value, so you can gain equity both from repaying what you’ve borrowed, and through an increase in value to your home. 

If you’re built up equity in your current home, you will usually be able to use this as a deposit when buying your next home, so long the level of equity you have matches the lender’s requirement. 

Having substantial equity in your home could help to convince your existing lender to increase your loan when you port your mortgage to the new property, or it could be used as the deposit for a completely new mortgage with another lender. 

Some lenders may request an additional cash deposit if you don’t have enough equity in your home to serve as a deposit on your new mortgage.

Moving house in negative equity

If you’re in negative equity the situation can be more complex, as many lenders are reluctant to offer new mortgages or port existing mortgages in these circumstances. 

Negative equity means your home has become worth less than what you owe on your mortgage. Negative equity usually occurs when there is a drop in house prices, but it can also be caused or made worse by missing mortgage payments.

For example, if you bought a house for £200,000 with a 90% mortgage of £180,000, but the property is now only worth £175,000, you would have to find an additional £5,000 to clear the debt and break even when you sell it.

It’s always a good idea to speak to a mortgage broker before discounting moving house entirely. For many people, however, waiting until the value of your property rises again or overpaying the mortgage to try and reclaim some of the equity will be the best option. 

What fees are involved when taking out a home mover mortgage?

If you take out a new mortgage when you move home, you will pay similar fees to when you were a first time buyer, or remortgaged. Porting is usually cheaper, however, you will still need to pay for a valuation and legal fees. Also bear in mind that if you port your existing mortgage, the term remaining could be shorter than the period of the new deals you’re considering, making it harder to compare like for like.

When you are choosing whether to port your mortgage or take out a new one, remember to consider all of the following costs, which can apply whenever you change your mortgage. 

  • Early repayments charges (ERCs): This will only apply if you’re leaving a deal with a fixed-rate or introductory period that has not yet ended. However, it could cost up to 5% of your remaining mortgage debt, so it’s important to consider whether waiting out your existing deal is a better option than forking out for this fee

  • Exit fee: Not all lenders charge an exit fee, but it’s usually a smaller fee to close the mortgage account. This can apply even if you are not locked into your existing mortgage 

  • Arrangement fees: The vast majority of mortgages will have arrangement fees to set up the mortgage. Those mortgages that are offered fee-free typically have higher interest rates, so it’s important to weigh up the overall costs

  • Booking fee: This is not commonly charged in this day and age, but some lenders still charge a booking fee to hold your mortgage offer. This can be in  addition to the arrangement fee and is usually non-refundable if the mortgage falls through

  • Valuation fee: You will always need to have a valuation of your new property carried out by the lender when you move home, as they will need to ensure it’s worth the amount you’ve offered. Some mortgage lenders offer free valuations as an incentive, but bear in mind that this will mean you have to use their chosen surveyor

  • Legal fees: Conveyancing and legal searches will always apply when moving home or remortgaging as solicitors have to transfer the legal rights of property ownership. The costs vary depending on the firms used for these services. Again, this is something that may be offered for free with certain mortgage deals, however, it’s important to look at costs of the entire mortgage package before you decide what’s the best deal overall.

Benefits of staying with current lender

  • Your existing mortgage may be on better terms than any home mover mortgages that are available to you

  • You won’t need to pay ERCs or wait out the end of the deal to avoid them

  • You won’t have an arrangement fee to pay

Benefits of switching to a new lender

  • You could get a better mortgage deal than your current one

  • If your existing lender is unable to extend your borrowing without you taking out a second mortgage with them, it could be easier to set up one new mortgage with another lender

  • You’d have the opportunity to change your interest rate type, repayment type or find more flexible terms when switching to a different deal

This can be a tough decision to make, so it may be worth speaking to a mortgage broker who can look at the whole market to find out whether porting or switching mortgage deals is the best option for you. They will also have access to deals not available directly from lenders.

Claire Flynn - Senior Mortgages Editor at Uswitch
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There's a lot to think about when you move home, including your mortgage options. You might want to port your current mortgage, but even if you can, it’s always worth speaking to an expert to make sure it’s the right option for you.”

Claire Flynn

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