Mortgage Payment Protection Insurance (MPPI)

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Can I transfer my current mortgage to another property?

If you’re planning on moving home, one of the key things you’ll need to think about is a mortgage for your new property. 

But what many people don’t realise is that, when you move, it is possible to transfer your existing mortgage with you. 

A process known as porting, this essentially involves applying for a new mortgage with your current lender with the same rates and conditions as your current mortgage. In other words, you are transferring your current mortgage deal onto your new property. 

Although many mortgages are portable, not all are, so it’s worth checking with your lender before considering this option. 

So, what’s the catch? Firstly, there are no guarantees that your lender will allow you to port your mortgage. And, if they do, the risk is secured against the new property, and it is likely they will want to review your financial circumstances. If, for example, your income has fallen or your credit score has dropped, the transfer may be denied. 

If you are looking into transferring a mortgage, we have created a helpful guide outlining everything that you need to know!

How does transferring a mortgage work?

If you’re considering transferring your mortgage, the first thing you will need to do is find out whether or not your loan is transferrable.  To do this, refer back to your original offer letter, or failing that, you can contact your lender directly to discuss your options. 

If you are eligible to transfer your mortgage, you can then apply for a mortgage which includes a credit check, along with a valuation of the new property you want to purchase and an in-depth assessment of your income. This is because, although the rate, terms and conditions of your mortgage may remain the same when you port it, it will technically be a new mortgage against a new property.

As it’s not the mortgage itself that moves, you will still need to apply for a mortgage on your new property. In effect, you’re reapplying for the same deal. 

Your lender will then review your application and decide whether or not you can still afford the mortgage. If your circumstances have changed since you took out the original mortgage, you may not be approved for the transfer. 

And it’s not just your financial circumstances that a lender will take into account. They will also consider your age, changes in employment, and the type of property you want to move to. All these factors will have a bearing on whether or not your application is accepted. 

They will also need to establish whether the level of risk will change when you move. If, for example, the property has a lower value and the loan to value increases, there will be more risk involved. 

The process of porting your mortgage varies from lender to lender, however it is typically relatively straightforward and no more complex than a standard mortgage application. 

You can transfer your mortgage to a cheaper property; however, lenders will only let you do this if you keep the same loan to property value (LTV) ratio. In order to keep the same LTV percentage, you may have to repay part of your original loan to the lender. This could incur an early repayment charge. 

Equally, if you wish to transfer your mortgage to a more expensive property, you will have to meet similar criteria for your loan to property value ratio.

Should I transfer my mortgage?

There’s both pros and cons to transferring your mortgage and it’s certainly not a decision you should take lightly. Ultimately, it comes down to whether or not it is a financially savvy decision based on your individual circumstances. Make sure you weigh up the advantages and disadvantages. 

A good starting point is to compare the fees and savings associated with your offers, including exit fees, valuation fees and early repayment charges. This should help you to make a final decision. 

The pros of transferring a mortgage

- If you are keeping the same terms with the same lender, you may not need to pay any mortgage exit fees or early repayment charges. 

- If your original mortgage is fixed on a lower interest rate, that rate will transfer over to the new property. 

- The mortgage application process may be shorter as you will have already provided much of the information to your lender (although they will need to confirm if any details have changed).

The cons of transferring a mortgage 

- By sticking with your current lender and terms, you risk potentially missing out on better deals elsewhere. It’s important to consider all the available deals and rates.

- When you port a mortgage, you will still have to pay certain fees and charges such as valuation fees, legal fees, and arrangement fees. 

- If you’re transferring your mortgage to a more expensive property, the additional money you borrow will probably be at a higher rate. This means you’ll have two different products at two different rates, with two different end dates. This can make re-mortgaging in the future more difficult. 

How long does it take to transfer a mortgage?

The amount of time it takes to transfer a mortgage will vary depending on a number of factors, including the type of property, whether the value of the property is changing, and if your lender approves the transfer. However, porting the mortgage will usually take anywhere between 14 days and 3 months. 

If you are unsure struggling and require assistance to help make a decision or you’re wanting to talk through your options, it’s always worthwhile speaking to the professionals. At Charters Financial Services, we’re on hand to offer the very best mortgage advice, please get in touch at 03454 500 200 or hello@chartersfinancialservices.co.uk

The property market has experienced a resurgence of low-deposit mortgages with increasing numbers of lenders offering 90% loan-to-value (LTV) products. The low-deposit comeback is likely to initiate a further rise in the demand for property from first-time buyers and those who are still holding their breath for a much-wanted stamp duty holiday extension.

Research by Moneyfacts, the financial information service, has revealed a staggering increase in the number of mortgage deals in recent weeks – from 160 deals available on 1 January to 277 on 12 February. But, more significantly, the availability of 90% LTV products leapt from 32 to 47 in the same period and, with cashback deals for first-time buyers with a 10% deposit increasing to 83 from 50 just a month ago, there’s fresh hope for those wanting to get onto the property ladder.

‘We’ve seen a surge in the availability of low-deposit mortgages since the start of the New Year,’ revealed Alain Amos, Managing Director of Charters Financial Services. ‘Before Christmas, the restrictive conditions of the few high LTV providers around had made it difficult, if not impossible, for many prospective borrowers to take advantage of products that were on offer for limited periods.

‘Fast forward just a few weeks and, with the earlier stipulations being removed from what are now core range products for the majority of high street lenders, low-deposit mortgages have made a welcome comeback. There is now a real opportunity, in particular for many first-time buyers, to join the mortgage market having been locked out of it for much of 2020.’

Indeed, Eleanor Williams, finance expert at Moneyfacts.co.uk, has pointed to the potential for a concrete strengthening of the first-time buyer market:

‘There are of course still hurdles for these borrowers to overcome,’ she explained. ‘House prices inflated quite significantly last year – although early indications are this may be slowing in 2021 – and savings rates have continued to descend to rock bottom lows, making building a larger deposit difficult, as have high rental payments. But their options have been steadily increasing and, added to the news that the homebuyers using the current Help to Buy equity loan scheme have a further extension on the deadline for completions, there is hope that 2021 may see more potential homebuyers take that first step onto the property ladder.’

If a low-deposit mortgage sounds appealing, the renewed scope for a great deal makes this is the perfect time to speak to a mortgage broker who can give you all the advice and support you need in choosing the best deal. Contact our team of specialist mortgage experts and we’ll talk you through your options.

What is mortgage payment protection insurance?

Has the pandemic made you concerned about how you’ll pay your mortgage if you’re made redundant or can’t work due to sickness? Don’t worry, you can take action to protect yourself. And one way to do this is to take out mortgage payment protection insurance (MPPI). Here’s what you need to know.

Why would I need it?

For the majority of homeowners, their mortgage is their biggest monthly outgoing. So, if losing your job or not being able to work due to an illness or accident means you’ll struggle to pay it each month, it’s sensible to protect yourself. If you live by yourself and don’t have savings to fall back on it may be particularly important. Similarly, if you live with a partner who does work but you can’t manage on their income alone, it may be a good option.

There are varying levels of mortgage payment protection insurance you can take out depending on what you want to be covered for. These are ‘unemployment only’, ‘accident and sickness only’, and ‘accident, sickness and unemployment.’ The level of cover you take will help determine the cost of the premiums. So, consider which would suit your circumstances best.

But, you need to bear in mind that due to the pandemic, some insurers have added Covid-related exemptions to their policies, so make sure that you check before you take out any protection. Many providers have also begun to cover people who are self-employed. However, it’s always important to make sure you check the small print carefully to make sure you’re not exempt.

Can’t I take a mortgage payment holiday instead?

Many people are taking mortgage payment holidays at the moment due to the impact of Covid on their finances. But it’s important you don't see being able to take a payment holiday as an alternative to MPPI.

Mortgage payment protection insurance is a policy that pays out after you successfully make a claim, so you can pay your mortgage each month. In contrast, a payment holiday means you are deferring paying what you owe.

Also, you may be able to take a payment holiday due to Covid right now and may continue to be able to do so for the next few months as the scheme has been extended. But you can’t assume this will continue to be the case next year.
And there are other consequences of taking a payment holiday too. For example, while the advice from the FCA is that a mortgage holiday will not affect your credit record, it could affect future lending decisions.

How much does mortgage payment protection insurance pay out?

The point of mortgage payment protection insurance is to cover the cost of your mortgage in the event you need to make a claim. And these policies will typically pay out for up to two years. But you can choose for the policy to pay out more than the cost of your mortgage so other bills are covered too. Alternatively, you can opt to receive a proportion of your salary. Again, the level of cover you choose will have an impact on the cost of premiums.

When do I get the money?

You’ll usually need to be off work for a specified number of days before the policy starts paying out. This can range anywhere from 30 to 180 days. The longer the period you’re prepared to wait, the cheaper the policy will typically be.

So, consider your own circumstances. If you’re entitled to sick pay from your employer, bear this in mind when you’re deciding how long you’re happy for the waiting period to be. However, it is possible to get ‘back to day one’ policies which don’t have a waiting period before you can claim.

What other types of protection are there?

Income protection

This pays out a proportion of your salary each month if you’re unable to work due to accident or illness. Income protection policies typically pay out for a longer period than MPPI. Policies vary but they may pay out until you are able to return to work or reach retirement. Income protection tends to be more expensive than MPPI.

Critical illness cover

This will pay you a tax-free lump sum in the event that you're diagnosed with a serious illness covered under your policy. You could use a lump sum to either service the payments on your mortgage, or pay it off completely, depending on the amount you receive.

Life insurance

These policies will only pay out if you pass away. But they're worth considering if you have dependents as they pay out a lump sum.

Who should I talk to?

Life can throw curveballs at us when we least expect it, so it’s really important to have a plan in place in case things go wrong.

If you want to find out a bit more about protection and insurance policies, whether it be against illness, accidents or losing your job, our expert protection advisers will be happy to help. For insurance business, we offer products from a choice of insurers. Feel free to get in touch with one of our expert advisers.

With mortgage and protection advisers in Winchester, Southampton, Farnham, Bishops Waltham, Alton, Chandlers Ford, Alresford, Romsey and Park Gate, you are never too far from insurance advice.

Thank you so much Charters. Big shoutout to Gavin Andrews and Cara Simpson-Hayter. They went above and beyond to help me get my mortgage in testing times, make them selves available and were always willing to help.

Yes B

November 2020

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