Mortgage Payment Protection Insurance (MPPI)

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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.

If you’re unable to work due to sickness, a disability or if you lose your job, mortgage payment protection insurance will cover the cost of your mortgage payments. Without it, you’ll still need to make your monthly mortgage repayments or risk losing your home.

There are two ways that you can protect your mortgage repayments if the worst happened. You can make a claim on your mortgage protection payment insurance policy or use the payments you’ll receive on a general income protection insurance plan to meet the cost of your mortgage repayments.

In essence, there are three different types of mortgage protection payment insurance and costs will vary according to the product you choose. In order of insurance premiums, starting with the least expensive, these are the different types of mortgage protection payment insurance:

  • A basic ‘unemployment only’ policy will only cover you if you’re made redundant.
  • An ‘accident and sickness only’ policy will only cover you if you have a long-term illness or suffer a serious injury.
  • An ‘accident, sickness and unemployment’ policy is a belt-and-braces plan that will cover you if you’re made redundant have a long-term illness or suffer a serious injury.

When you make a claim on your mortgage protection payment insurance policy, your provider will pay you a fixed sum each month, usually for up to two years from the date you became unable to work or lost your job. You will usually have the option to base what you could be paid out on your salary – this is typically up to half your monthly wage. Other options include covering the cost of your mortgage repayments alone or extend it to cover the cost of your living expenses and/or regular bills too. This is usually up to 125% of the cost of your mortgage.

Bear in mind that if your illness prevents you from returning to work for more than two years, mortgage protection payment insurance may not provide you with the cover you need. In this case, consider taking out an income protection insurance policy.

If you’d like to know more about mortgage protection payment insurance, talk to our team of independent insurance protection advisers who have access to a great range of insurance products to suit your personal circumstances. Call us on 08454 500200 or click here to make an enquiry.

Without Julie we would not have been able to purchase our first home.

Ours was a challenging case; we wanted to live in Winchester as first-time buyers with an unusual income situation. We found the ideal property for us at auction.

Julie was amazing. From our first meeting, and throughout all subsequent meetings, Julie re-assured us and made us aware of all the information we needed to make the correct decisions at that time.

As first-time buyers attempting to purchase a property unconventionally, Julie worked tirelessly. We had frequent contact on late evenings and weekends to not only help us secure an application in principle quickly before the auction but also to secure us our actual mortgage after we had won our property.

Julie went beyond the call of duty in making us feel confident and being available at any time to talk us through any question or worries we had about the process.

We will be recommending Julie as a mortgage advisor to anyone who is considering purchasing a house; from first time buyer to frequent home buyer. It has been a pleasure and Charters Financial Services should be proud to have Julie as an employee.

Andy L

December 2019

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