Mortgage Questions Answered: What Buyers and Movers Need to Know

Whether you’re buying your first home, moving somewhere bigger, downsizing or simply wondering what you could afford, the mortgage market can sometimes feel like one of the most complicated parts of moving home.

How much should you borrow? Can you take your existing mortgage with you? What happens if you change jobs halfway through buying a house? And is the lowest mortgage rate you see advertised actually the best deal?

Following our recent mortgage Q&A with Yasmin, we’ve continued the conversation with Warren from Mortgage Vaults, who provides mortgage advice across the March and Chatteris areas.

We put some of the questions we regularly hear from buyers and sellers to Warren to find out what people should consider before beginning their next move.

Are Buyers Becoming More Cautious About Borrowing?

Although lenders have been looking at ways to improve affordability, Warren says he’s seeing buyers think more carefully about how much they actually want to borrow.

There’s an important difference between the maximum amount a lender may be prepared to offer and the amount you’re comfortable repaying every month.

With household costs having increased in recent years, some buyers are deliberately choosing properties below their maximum borrowing capacity so their monthly mortgage payments leave them with more breathing room.

That’s an important consideration when setting a property budget: don’t just ask, “How much could I borrow?” Think about what monthly commitment feels comfortable and sustainable for your household too.

Could You Borrow More Than You Think?

On the other hand, some buyers may discover that their potential borrowing capacity is greater than they expected.

Warren explains that lenders have been competing for borrowers, including first-time buyers, and affordability criteria vary considerably between lenders.

That’s one reason it can be useful to understand your position before beginning your property search.

Without doing so, you could find yourself looking at homes outside your realistic budget – or overlooking properties that may actually be within reach.

Can You Take Your Existing Mortgage With You?

If you already own a home and have a mortgage, moving doesn’t automatically mean starting again with an entirely new mortgage product.

Some mortgages can be “ported”, meaning an existing mortgage product may potentially be transferred to your new property, subject to the lender’s criteria and a new assessment.

If you’re moving to a more expensive home, there may also be circumstances where additional borrowing can be arranged alongside the existing product.

However, this isn’t automatic and every lender has different criteria. If you’re downsizing or reducing your borrowing, early repayment charges may also need to be considered.

The important message is to check the terms of your existing mortgage and seek appropriate advice before making assumptions about what you can take with you.

What Happens if Your Circumstances Change?

Life doesn’t always conveniently wait until you’ve completed on a property.

You might change jobs, receive a promotion or experience another change in circumstances while you’re going through the mortgage process.

Warren’s advice is to be open about any changes and discuss them before making decisions that could affect your application.

A change of employer isn’t necessarily a problem, particularly if you’re moving into a similar role on comparable or higher pay, but circumstances differ. A move from employment to self-employment, for example, could have a much greater impact because lenders will generally require evidence of income.

The key is not to assume. Speak to your mortgage adviser and establish how a proposed change could affect your individual application.

Is the Lowest Mortgage Rate Always the Best Deal?

Mortgage headlines understandably focus heavily on interest rates, but Warren highlights an important distinction: the lowest advertised rate isn’t necessarily the most suitable or lowest-cost mortgage for you.

Mortgage products can include fees, different loan-to-value requirements and varying eligibility criteria.

A highly competitive headline rate may, for example, only be available to someone with a much larger deposit or level of equity. Another product may carry a higher interest rate but lower fees, potentially changing the overall cost during the initial deal period.

Instead of focusing exclusively on the percentage rate, borrowers should consider the overall cost and their likely monthly payments.

Why Speak to a Mortgage Adviser Before House Hunting?

One of Warren’s strongest recommendations is to understand your finances before falling in love with a property.

Knowing your likely budget can make your search far more productive.

It also gives you an opportunity to identify potential issues early. For example, some people discover something unexpected on their credit file only when they begin applying for a mortgage.

That doesn’t necessarily mean a mortgage won’t be possible, but identifying an issue early gives you more time to understand your options rather than discovering it after you’ve found the home you want.

What About Unusual or Rural Properties?

This is particularly relevant across Cambridgeshire and the Fens, where buyers may encounter older, rural or unusually constructed properties.

The property itself can influence which lenders are prepared to offer a mortgage.

Construction type, rights of way, drainage or sewerage arrangements and environmental risks are just some of the factors that may need to be considered.

Different lenders can also take different approaches to the same property. A lender declining a particular construction type or property doesn’t necessarily mean every lender will take the same view.

This is another area where understanding the requirements of different lenders can be particularly valuable.

Get Prepared Before You Move

If there’s one theme running throughout our conversation with Warren, it’s the value of preparation.

Understanding what you could borrow, what you actually feel comfortable borrowing, your existing mortgage arrangements and any potential issues before you begin seriously house hunting can make the whole process easier.

Once you understand the financial side of your move, our Ellis Winters team can help you with the property side – whether that’s valuing your existing home or helping you find your next one.

To watch the full video interview with Warren click here.

Important information: This article is intended for general information only and should not be taken as financial or mortgage advice. Mortgage eligibility, lending criteria and product availability vary between lenders and individual circumstances. If you’re considering buying a property, you should seek personalised advice from a qualified mortgage adviser. Your home may be repossessed if you do not keep up repayments on your mortgage.