Moving to a bigger or better home usually means borrowing more, and there are a couple of ways to do it. Understanding them helps you move up the ladder affordably. This guide explains borrowing more when you move, covering additional borrowing, affordability, and the cost of a larger mortgage.
Why you might borrow more
When you move to a more expensive home, the extra cost beyond your current equity usually has to be borrowed, so your mortgage grows. Even after putting in the equity from selling your current home, you may need a larger mortgage than before to afford the new property. Borrowing more is therefore a normal part of trading up, and the key is to do it affordably and at a good rate.
Porting plus additional borrowing
If you port your existing deal, you can often add the extra you need as additional borrowing on top, as our guide to porting a mortgage explains. This means your original balance keeps its existing rate, while the top-up is borrowed separately, frequently at a different rate. You end up with your ported deal plus the additional amount, which together make up your new, larger mortgage on the new home.
A larger new mortgage instead
Alternatively, rather than porting and topping up, you can take a completely new, larger mortgage for the new property, repaying your old one. This opens up the whole market for the full amount, which may be cheaper overall than keeping an old deal plus a top-up, though it could trigger an early repayment charge on your current deal, as our guide to porting versus a new mortgage explains. Comparing both approaches is worthwhile.
Affordability for the larger amount
Whichever route you choose, the lender assesses whether you can afford the larger mortgage, looking at your income, outgoings and credit, and stress testing against higher rates. Borrowing more means larger payments, so affordability determines how much more you can borrow and therefore how much home you can buy. It is worth checking your borrowing capacity early, much as a first-time buyer would, before committing to a more expensive property.
The top-up may be at a different rate
When you port and add a top-up, the additional borrowing is often on a separate product at a current rate, which may differ from your ported deal and may have its own end date. This can leave you with two parts to your mortgage on different terms, which is worth understanding, as it affects your payments and future remortgaging. A broker can explain how the parts fit together and when each can be reviewed.
The cost of a bigger mortgage
Borrowing more increases your monthly payments and the total interest you pay over the mortgage term. Stretching to a much larger mortgage can leave you financially tight, especially if rates rise, so it is wise to borrow a comfortable amount rather than the absolute maximum. Thinking about the monthly cost of the larger mortgage, not just whether you can get it, helps ensure your new home is affordable to live in.
Other costs of trading up
Remember that moving to a more expensive home also increases other costs, notably stamp duty, which rises with the price, as our guide to moving to a more expensive home explains. Legal fees, surveys and removals add to the bill too. Budgeting for the full cost of trading up, alongside the larger mortgage, ensures you can comfortably afford both the move and living in your new home afterwards.
An example of borrowing more
Suppose you sell a home worth £250,000 with a £150,000 mortgage, leaving £100,000 of equity, and buy a £350,000 home. You put in your £100,000 equity and need a £250,000 mortgage, £100,000 more than before. You could port your existing deal on £150,000 and add £100,000 of additional borrowing, or take a new £250,000 mortgage. Either way, your borrowing rises to match the dearer home.
Using your equity
The equity from selling your current home reduces how much you need to borrow for the next one. The more equity you have, through paying down your mortgage or a rise in value, the smaller the mortgage you need for a given new home. Knowing your likely equity helps you work out how much you must borrow and therefore what you can afford, alongside the lender's affordability assessment.
Two parts on different terms
When you port and add a top-up, you can end up with two parts to your mortgage on different rates and end dates, the ported deal and the additional borrowing. This is worth understanding, as it affects your payments and when each part can be reviewed or remortgaged. A broker can explain how the two parts work together and help you plan future remortgaging so the parts can eventually be aligned.
When a new mortgage beats porting
Sometimes a single new mortgage for the whole amount is cheaper or simpler than porting plus a top-up, especially if current rates are good or your existing deal is not worth keeping. It may incur an early repayment charge, but the overall cost can still be lower, as our guide to porting versus a new mortgage explains. Comparing both approaches ensures you finance your move in the cheapest way.
Keeping it affordable
Borrowing more raises your payments, so it is important the larger mortgage is comfortably affordable, not just approvable. Trading up to the maximum you can borrow can leave you stretched if rates rise or your circumstances change. Choosing a mortgage whose payments sit well within your budget, even if that means a slightly less expensive home, helps ensure your move improves your life rather than straining your finances.
Get the structure right
The key to borrowing more when you move is getting the structure right for your situation: porting plus a top-up to keep a good rate, or a single new mortgage for simplicity and access to the whole market. Compare the total cost of each, including any early repayment charge and the rates on offer, and choose the cheaper, while keeping the borrowing comfortably affordable. A broker can model both and recommend the best approach.
Think about future flexibility
When borrowing more to move, it is worth thinking about future flexibility as well as today's cost. Ending up with two parts on different end dates can make your next remortgage more complicated, so ask how and when the parts can be aligned. Choosing a structure that not only finances this move affordably but also leaves you well placed to remortgage cleanly later can save hassle and money down the line, which a broker can help you plan.
In short
Moving to a dearer home usually means borrowing more, either by porting your deal and adding a top-up, often at a different rate, or by taking a larger new mortgage, which may incur an early repayment charge but opens the whole market. The lender assesses affordability for the larger amount. Borrowing more raises your payments and total interest, so borrow comfortably, and budget for the other costs of trading up.
Where to get help and next steps
Read our guides to porting a mortgage, moving to a more expensive home, and releasing equity. This is general information, not mortgage or financial advice.