It’s tough on the property ladder these days. First-time homebuyers don’t have it easy, but people looking to upgrade or relocate face just as many challenges when it comes to purchasing a property. Here are some things that you will need to consider when looking at how to move up the property ladder.
This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.
There are many things to consider when you want to move up the property ladder – location, size and price-point are all just the starting point.
Mortgaging your new property
Once you decide you want to move, you should find out how much equity you have in your current home and if it will be significant enough to use toward a new mortgage. Very rarely will it be enough to cover a new mortgage completely – this usually happens if you’re downsizing – so you need to figure out how you will be financing your new home purchase.
You have the option of porting your existing mortgage to your new home or you can look for a new mortgage deal for the new property. You’ll need to confirm whether or not your existing mortgage has early termination penalties or any other fees or if it’s even possible to port it. How much funding you need and how low the rates are will also factor into your decision.
Costs to keep in mind
Apart from the main cost of financing your home, there are plenty more expenses you’ll need to plan for. You’ll need to consider mortgage arrangement and mortgage valuation fees which could cost you thousands of pounds each. Legal and conveyancing and survey fees need to be paid as well. And if you’re selling your home as part of the moving process, don’t forget about the estate agent fees that need to be paid.
Stamp duty rates will vary depending on the price of the property, but will be owed on any property over £125,000.
- Up to £250,000 you pay 2%
- up to £925,000 you will owe 5%
- up to £1.5m
- 10% is owed, and anything over that is 12% stamp duty.
Generally, the bigger the deposit, the more likely you are to secure a good mortgage deal with a low interest rate. You can find mortgages with as little as a 5% deposit, but usually, you will need at least 20% of the purchase price.
Other costs that add up
If you’re selling your property you’ll need an Energy Performance Certificate (EPC), that reports your property’s energy costs to show to prospective buyers.
If you need to store anything, that’s an extra cost, and chances are you won’t be moving your belongings on your own so add removal costs onto your total as well.
You should also factor in ongoing costs for your new home such as:
- maintenance/improvement costs
- insurance policies
- council tax
- utilities
- mail redirection costs…
The various expenses associated with moving can really add up.
Help moving up the ladder
Whether you’re buying your first home or trying to take the next step up the property ladder, it’s a massive financial commitment. No matter where your next move takes you, we’ll help you find the right mortgage for you. To discuss your options, contact Dental & Medical Financial Services today.