WHETHER YOU’RE LOOKING for your dream home or want something more suitable for your current needs, you may have been thinking about moving home recently. As we all know, it can be hard to move up the property ladder.
Is your current home in a location you love, but just doesn’t have the room you need? Do you feel stuck on the property ladder? Always finding yourself overstretched and struggling to find that extra deposit for a move up, or even just that little bit more space?
The cost of housing within your current area may be too high, or you could simply not have enough saved to afford your next move. This can be even more problematic if you are married with children and think that buying a bigger home will help to provide stability for your family.
With this in mind, there are some things that you will need to consider when looking at how to move up the property ladder.
SELLING CURRENT PROPERTY FIRST
Most people sell their current home at the same time as buying a new one, forming a property chain. However, if you decide to sell before you buy your next property it gives you the advantage of remaining in control of your property sale because you won’t need to make a quick sale, or be pressured into selling cheaply.
Selling before buying your next home also puts you in a stronger position when buying. The seller you want to buy from would almost certainly prefer someone who has the cash in the bank rather than entering a chain, where their sale is dependent upon you finding someone to buy your property.
You may get a better price on the property you are buying if you find a seller who is keen to move quickly. If you put in a good and fair offer the buyer is unlikely to take another if it means entering a property chain, so you are less likely to be gazumped. You will know exactly how much you can spend on the property you are buying because you’ll have the money from your sale in the bank – buying your new home won’t be dependent on you achieving the expected price on your existing one.
But before you choose this option make sure as many things as possible are organised beforehand, such as getting your mortgage pre-approved so you can buy quickly.
CHOOSING YOUR NEXT PROPERTY
The first step is identifying the area you want to live in. What you can afford will be a key deciding factor for where you will focus your property search. You will need to take into consideration whether it is more urban, suburban or rural. Think about commuting time and ease of getting around, proximity to shops and restaurants, and the quality of schools in the area, if you have or are likely to be planning a family in the future.
Once you’ve found a property, learn as much as you can about it. When you go to the viewing, if it’s an older property, take your time to make sure the rooms are big enough, that there is plenty of natural light and no signs of damp.
Also check the condition of the electrics, heating, windows and roof. Ensure it is a home you will grow into, as people tend to like having more space as they grow older. Do you have enough bedrooms and a garden? Think about future potential or changes you might be able to make to add space if you need it.
Even though there are many types of homes to choose from, you are unlikely to find a property that has everything you want, so you may have to make trade-offs. Being next to a busy road reduces prices, but if the noise doesn’t bother you then it could be an opportunity. Many people don’t want to live right next to a school because of the noise from the playground, but if you are always out in school hours it won’t matter.
You pay a big premium for off-street parking, and it reduces car insurance costs, but do you really want it? People will often spend more for a garden, but if you aren’t that bothered, then it won’t be money well spent. If you don’t have a large budget and want to live centrally, living in a flat above a shop could prove perfect.
MORTGAGING YOUR NEW PROPERTY
Before you start searching for your next home, you’ll want to find out how much you might be able to borrow.
If you already have an existing mortgage you will either need to apply for a new home moving mortgage or there may be the option to take or ‘port’ your existing mortgage to your new home.
You will need to consider the following:
- Does your existing mortgage have early redemption penalties?
- Is your current mortgage portable?
- How does porting a mortgage work
- Will additional borrowing be needed to buy your new home?
- Is the current rate better than any new rate that could be obtained in the open market today?
- Will any other penalties apply if you move home while you have a mortgage?
COSTS TO CONSIDER
Aside from the obvious cost of potentially servicing a larger mortgage, there are some additional costs to factor in, including:
- Stamp duty
- Survey fees
- Mortgage arrangement fees
- Legal fees
- Removal costs
- Broker fees
- Your deposit
- Estate agents fees
- Energy Performance Certificate (EPC)
