Moving Home Mortgage Options: Key Considerations for Keeping or Selling Your Property

Moving Home Mortgage Options: What to Consider When Keeping or Selling Your Property

If you’re planning to move home, whether upsizing or downsizing, there are several options for handling your existing property. Your decision will depend on factors such as financial goals, mortgage terms, and long-term property investment plans. You may choose to sell your home to release equity, let it out to generate rental income, or keep it as a second residence. Each option has advantages and potential costs, making it essential to consider lender requirements, tax implications, and affordability.

This guide explores the different routes available when moving home to help you make an informed decision about your existing property.

Selling Your Existing Property

Selling your home is often the most straightforward option, particularly if you need the proceeds to fund a deposit for your next property. Upon selling, your existing mortgage will be repaid, and any remaining funds can be used towards your new home.

Key Factors to Consider:

• Costs involved: Estate agent fees, solicitor fees, and potential early repayment charges on your mortgage.
• Timing: If you are purchasing a new home at the same time, ensuring both transactions complete simultaneously can help avoid complications.
• Market conditions: Property prices and demand can impact how quickly you sell and at what price.

Letting Your Property

Rather than selling, you might choose to let your property to generate rental income while benefiting from potential capital appreciation. However, becoming a landlord involves financial and legal responsibilities.

Key Considerations:

• Mortgage lender approval: Many residential mortgage agreements prohibit letting without the lender’s consent. You may need to apply for “Consent to Let.”
• Ongoing costs: Maintenance, repairs, and potential void periods where the property is unoccupied.
• Tax implications: Rental income is taxable, and recent changes to tax relief on mortgage interest may affect profitability.
• Letting agent fees: If you choose to use an agent to manage the property, their fees will reduce your rental income.

Let-to-Buy: A Buy-to-Let Mortgage Option

An alternative to obtaining “Consent to Let” is switching your mortgage to a buy-to-let loan through a Let-to-Buy remortgage. This allows you to refinance your current home onto a buy-to-let mortgage while securing a new residential mortgage for your next property.

Benefits of Let-to-Buy:

• Releasing equity: If your home has increased in value, you may be able to release funds to use as a deposit for your next home.
• Cash flow flexibility: Buy-to-let mortgages are often interest-only, reducing monthly payments.
• Long-term investment: Retaining your property as a rental asset could provide financial security in the future.

Considerations:

• Additional costs: Valuation fees, product fees, solicitor charges, and mortgage broker fees.
• Affordability assessment: Lenders will require proof of expected rental income and assess your financial position carefully.

Keeping Your Property as a Second Residence

If you regularly work away from home or need a second property for personal reasons, retaining your existing home as a second residence is another option.

Key Factors to Consider:

• Lender restrictions: Some lenders impose limits on how many properties you can own with a residential mortgage.
• Affordability assessment: Managing two properties requires a stable income to cover mortgage payments and associated costs.
• Location considerations: If both properties are in close proximity, some lenders may question the necessity of a second home.

Making the Right Decision for Your Property and Mortgage

Whether you decide to sell, let, or retain your property, your choice should align with your financial objectives and mortgage eligibility. Selling can provide immediate funds, while letting can generate passive income and potential long-term gains. However, mortgage lender restrictions and affordability assessments play a crucial role in determining the feasibility of each option.

Need Mortgage Advice for Moving Home?

Navigating mortgage options when moving home can be complex, especially when deciding what to do with your existing property. At Mortgage-Tek, we specialise in mortgage solutions tailored for homeowners, contractors, and self-employed professionals. Whether you need guidance on Let-to-Buy, Buy-to-Let remortgages, or second residence mortgages, our expert advisers can help you find the right mortgage deal.

Get in touch with Mortgage-Tek today for specialist mortgage advice and ensure a smooth transition to your next home.