Moving homes can be one of the most stressful events in life. The thought of selling your home, negotiating your next purchase, and hoping that everything goes smoothly can be overwhelming. Whether you are a seasoned mover or a first-time homebuyer, every transaction is different and comes with its own set of challenges.
At A E Thomson, we believe that seeking the right mortgage advice before putting your house on the market can help alleviate some of the obstacles and stresses that come with moving. By understanding your maximum affordable borrowing capacity, potential moving costs, anticipated equity from the sale of your property, and any additional deposit funds, we can determine your budget for your next home.
Once you’ve determined your budget, you can begin searching for the most suitable estate agent to help sell your current home.
One of the crucial costs to consider when moving is the terms of your current mortgage. If you plan to move while tied into an interest rate, you may face Early Repayment Charges if you sell your home and repay your existing mortgage early.
Depending on your circumstances and market conditions, you may have the option to move your current mortgage to your new home, avoiding these penalties. This is known as ‘porting’ your mortgage. Seeking advice early in the process can help identify whether an Early Repayment Charge is a realistic cost you’ll have to factor into your overall moving costs.
What other moving costs are there?
If you’re planning a move, it’s important to keep in mind the various costs that may come up in addition to the actual move itself. Here are a few factors to consider:
- Estate Agency Fees An estate agent fee is usually charged once your sale is complete. This fee typically amounts to a percentage of the sale price, such as 1% – 1.5% + VAT. The estate agent will receive payment directly from your solicitor using the equity from your sale. Depending on the level of service you require, estate agent fees may fluctuate.
- Solicitor / Conveyancing Fees When you’re moving, you’ll need a solicitor to handle the sale of your home, as well as the legal work involved in your purchase. As a result, solicitor fees are higher than they would be for a first-time buyer. The cost of a solicitor varies depending on factors such as the type of service you require and your individual circumstances. Some common additional fees associated with solicitors include fees for the source of deposit, property type, leasehold property, and new builds. At A E Thomson, we have access to an extensive national panel of solicitors that can cater to your unique requirements. Our software is designed to streamline the process by breaking down potential costs based on the critical details of your transaction.
- Stamp Duty Depending on your circumstances and the purchase price of your new property, you may need to budget for Stamp Duty Land Tax, which is a tax paid by the purchaser upon completion of a property purchase. For further guidance on stamp duty, you can use https://www.gov.uk/stamp-duty-land-tax. For most home movers you can seek confirmation from your solicitor, however, for more complex scenarios e.g. multiple properties, foreign nationals you may need to speak to a specialist tax advisor.
- Lender Fees Lenders typically charge an Application Fee, Valuation Fee and a Product Fee. We will provide you with a clear breakdown of all applicable fees when we make our recommendations. Keep in mind that some lenders don’t charge these fees, so we’ll only recommend those that best fit your individual needs and preferences.
- Survey Fees It’s always a good idea to conduct your own survey of the property you’re interested in purchasing, so you can identify any potential issues and costs. There are two main types of surveys – Level 2 and Level 3. Depending on the age and condition of the property, we’ll help you decide which survey is most suitable. We work with The Moving Portal to provide you with quotes and to find a suitable surveyor in your area. If you’re interested in learning more about surveys, do not hesitate to contact us.
- Broker Fee If you’re using a broker, you may be charged a fee depending on their fee model and service. We charge a fee for our service, which we will outline in the initial meeting. We will never submit an application without your prior consent and signed fee agreement.
- Moving / Removal Fees Often, the sale of your old property and the purchase of your new one will occur at the same time. This means that you may need to hire a removal company to transfer your possessions to your new home.
What options do I have If I’m tied into an interest rate with early repayment charges?
The depends on your unique circumstances and goals. Many lenders allow porting of current mortgages to new homes, which could help you avoid early repayment charges and maintain a preferential interest rate.
However, porting your mortgage entails a new application to your current lender, who may have revised their criteria or altered their lending policies. Additionally, changes in your circumstances (such as employment, children, financial commitments, or credit history) may impact your eligibility.
It’s possible that your application could be declined, or that the lender may not offer the borrowing amount you require to purchase your next home. In such a situation, you may have no alternative but to repay the mortgage early and incur the charges so that you can apply with a mortgage suitable lender to assist you in purchasing your next home.
When should I speak with a mortgage broker about moving home?
It’s crucial to speak with a mortgage broker before placing your property on the market.
We often receive enquiries from home movers who have already listed their property and agreed on a sale price, but haven’t yet received advice on their borrowing capabilities. This approach causes needless delays, added stress, and often leads to disappointment, especially if they can’t secure the necessary mortgage for the desired property or price range you had in mind.
By seeking advice before listing your property, you’ll know how much you can borrow and the potential expenses involved. This knowledge also helps with decision-making during the sale, such as how quickly you need to sell and what the lowest acceptable offer is for the type of property you want to purchase.
When should I instruct my solicitor?
Many sellers make the mistake of waiting until their property has been sold before hiring a Sale Solicitor. Unfortunately, this can cause significant delays in the process.
To avoid this issue, it’s advisable to instruct a solicitor before you first list your property, or at the very least, at the same time as you list it for sale. This will ensure that all the necessary steps are taken care of well in advance.
As the seller, you will be responsible for completing several forms, including a Property Information Form and a Fixtures and Fittings Form. Additionally, you will need to fill out a client questionnaire, sign the terms of business, and provide identification documents. You may also be required to supply key documents such as warranties, planning permission evidence, and certificates.
All of these steps take time, so it’s essential to be prepared and hire a solicitor early on to avoid any unnecessary stress later in the process.
What is negative equity?
Negative equity is when the value of your home is less than the outstanding mortgage you owe. This often happens when you face financial difficulties and are unable to make mortgage repayments, causing interest to accumulate and add to the overall balance. Negative equity can also arise from external factors, such as a decline in the economy or lack of property maintenance. In either case, it can hinder your ability to move, unless you have alternative means of repaying the debt, such as savings, inheritance, or a gift from a family member