‘Portable’ Home Mortgage Loans Look Set To Lure Brits

Historically, when Brits wanted to buy a new home they had to make a home mortgage application to a lender. The lender would then review the application, value the home and decide if the risk was securing enough to lend. If you wanted to move, you had to re-apply for a new mortgage on the new home. Burdensome, given that you have already had a previous mortgage approved. Also, not so anymore. Now your home mortgage loan can move with you.

Known as ‘portable’ home mortgage loans because mortgage lenders will let you transfer your UK home mortgage to another property within the UK regardless of how long the mortgage still has left and how much is outstanding, the principal reason why this type of mortgage is such a break-through in the UK is because you incur no charges. Traditionally, UK home mortgage lenders try to dissuade their home mortgage lenders from making any early repayment of their home mortgage by levying a hefty fee for any early repayment of the loan. As, under the old scheme, you needed to apply for a new mortgage each time you wanted to upgrade your home, by default you had to make early repayment of your old home mortgage as soon as you sold your home.

However, with competition strong in the UK home mortgage sector, and with recent figures out suggesting there may be a slightly slowing down of applications for new home mortgages, lenders are desperate to grab customers any way they can. The new portable home mortgage loan is certainly attractive to many Brits, who traditionally look to upgrade the house they live in every decade or so as they become more affluent in life and can afford bigger homes to live in.

In essence, calling these portable home mortgages is a little misleading, however, as most of us are looking to increase the size of our mortgage. As such, what happens is that the UK home mortgage lender agrees to transfer the mortgage on your old home to the new home and will then agree to give you a second UK home mortgage for the difference between what you need to buy for your new home and what you had left on your old mortgage. As such, you end up with two home mortgage loan accounts (or possibly more), but one mortgage over the property.

Richard Smith
2nd October 2006

More Information:

• Different Types Of Mortgage
  Rather like a full house in poker there seems to be a wide selection of mortgages on the market, but aren’t many of them the same kind of product?
• Paying Off Your Mortgage Early
  Twenty five years is the average period of a mortgage… Twenty five years is a long time! The dream of many people is to pay off their mortgage early. Can it be done?
• The True Cost Of Your Mortgage
  It’s easy to say “go and research the market place to find the cheapest mortgage”, but is it that easy to actually do it and how do you know that you have really got the best mortgage deal when you’ve finished?