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3 Apr 2019

The best mortgage deals for moving to a more expensive home

Find out the borrowing caps on the cheapest mortgages for home movers
Picture perfect houses on newly built estate.

Home movers wanting to upgrade to a detached house could be locked out of the best deals, especially in London and the South East, because of the borrowing caps set by some lenders.

Which? analysis of Moneyfacts data found that one in four of the best two-year and five-year fixed-rate mortgages (at an 85% loan-to-value ratio) cap borrowing at less than £750,000.

Of course, most buyers are in the market for homes that are well below this threshold. But given that the average detached home costs as much as £906,825 in London, some would-be movers may be in for a surprise.

We take a look mortgage lending caps and provide advice on how to ensure you can get the loan you need to buy your next property.

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Big mortgage lending caps

When you're shopping at the top end of the market, you should pay close attention to the maximum advance limits set by lenders. These will determine the most you might be allowed to borrow.

Our analysis of two-and five-year fixed-rate mortgages found a high concentration of maximum advance caps were set at less than £750,000.

Of the 208 two-year fixed-rate deals available on an 85% loan-to-value, we found 49 had a cap of between £250,000 and £750,000 for home movers.

It was a similar picture for five-year deals, with 43 of the 179 deals available coming with a maximum advance limit of between £250,000 and £750,000.

Mortgage deals with small vs big borrowing limits

These limits could cause problems for home movers buying in pricier areas of the country.

In the South East, for example, the average cost of a detached property is now £555,615, according to Land Registry data and in London a detached home will set you back a whopping £906,825.

The average cost of a detached home in the UK

Best mortgages for big loans

In a pricey area, you might find that the best rates available generally won't extend to the home you want to buy.

Below are the best deals for borrowers that come with a £1m or higher maximum advance cap for second-steppers and other home movers.

Best two-year fixed rates

LTVLenderTerm Initial rateRevert rateAPRCFeesMin/max advance limit
60%HalifaxFixed to 31/05/20211.43%4.24%3.9%£1,495£250k/£1m
65%Yorkshire Building SocietyFixed to 30/06/20211.54%4.25%4.2%£995£25k/£5m
70%HSBCFixed to 31/07/20211.5%4.19%3.9%£1,499£10k/£1m
75%Digital Mortgages by Atom BankFixed to 30/06/20211.44%4%3.64%£1,200£350k/unlimited
80%Digital Mortgages by Atom BankFixed to 30/06/20211.56%4%3.66%£1,200£350k/unlimited
85%HalifaxFixed to 31/05/20211.65%4.24%4%£1,495£250k/£1m

Source: Moneyfacts. Correct as of 1 April 2019.

Best five-year fixed rates

LTVLenderTerm Initial rateRevert rateAPRCFeesMin/max advance limit
60%HSBCFixed to 31/07/20241.81%4.19%3.4%£1,499£10k/£5m
65%Yorkshire Building SocietyFixed to 30/06/20241.89%4.99%3.7%£995£25k/£5m
70%NatWest Intermediary SolutionsFixed to 30/06/20241.91%4.24%3.5%£995£25k/£10m
75%Barclays MortgageFixed to 30/04/20241.9%4.24%3.4%£999£5k/£1m
80%HalifaxFixed to 30/06/20242.01%4.24%3.5%£1,499£250k/£1m
85%Digital Mortgages by Atom BankFixed to 30/06/20242.04%4%3.30%£1,200£350k/unlimited

Source: Moneyfacts. Correct as of 1 April 2019.

How much can you borrow?

The maximum lending cap isn't the only thing you'll need to consider when borrowing to move home.

Lenders will also consider how much you can afford to repay. Often, you'll be limited to borrowing between three and four-and-a-half times your total income. So, for example, to borrow £500,000, your household would need to earn at least £111,111 annually.

You can use our calculator below to work out approximately how much you might be able to borrow:

You'll also need to show evidence of your day-to-day expenses and any other loans, as well as your credit history, to give lenders a full picture of how much you can afford.

And don't forget to factor in interest rate fluctuations. While you might be able to comfortably afford repayments now, consider what would happen if your rate went up by 2-3% in future.