Climbing the Property Ladder
When your family expands, you change job, or your needs change, it may be time to think about moving up the property ladder. When your home starts to feel too small for your needs or you feel like it just isn’t working for you anymore, it is natural to want to take the next step and start looking at the housing market.
There are many things to consider when buying a new home and even when you're not first time buyers, it can be a complex and stressful process. With ever increasing property prices, it can be difficult to see how you will climb up the property ladder, especially when you want to take a step that makes it worthwhile to go the next level. We are here to help simplify the process for you, so keep reading.
Step 1: Selling Your Property
Typically, people will sell their home whilst searching for a new one. That being said, you can also sell your current home before you buy your next step up on the property ladder. This can be a useful position to be in as there will be no ‘onward’ chain, which means that the purchase of the new sale can go through quickly without depending on the sale of your property.
Most sellers will also prefer to sell to someone who has no onward ‘chain’ because it means the sale is not dependent on your sale (or the funds from it) to go through and you may be given preference over other interested parties if they have an onward chain. It also makes it easier for you to know what finances you have to work with to buy your new property.
If you do decide to sell before you buy, it is important to ensure that you have already had a mortgage preapproved, so that you can move promptly when your offer is accepted.
Step 2: Choosing a New Home
There are a few things to consider when choosing your new property and climbing up the property ladder. You want to make sure that it is the right purchase and will be suitable long term, so it’s worth thinking about as many variables as possible.
A primary focus should be on where you want to live (as they say: location, location, location), because this will impact what you can afford in that area and what kind of properties you can realistically focus your search on. A lot of important factors can come into the location options and are worth thinking about, like:
- Do you want to be in a rural area?
- Do you want to be in the city or a more metropolitan area?
- Do you need to be in a good school district?
- How close do you need to be to your workplace?
- Will you be expanding your family?
- Do you like to go out and socialise?
When you’re moving up the property ladder, it’s also vital to look closely at the house you’re considering, like:
- Will you have to do works to the property to make it habitable
- Will ALL the rooms work for your needs and if not, can you work around them or change them to work well?
- Are there conditions like damp or subsidence that could be quite costly or problematic to solve?
- Are the windows, roof, heating and electrics in working condition
- Is the garden right for you? Too big or too small can both cause problems and are worth considering, especially if you don’t have a green thumb.
Most people won’t find a perfect property, so you may need to compromise on certain aspects of the property, or the area that you’ve chosen to live in. If you find that you can’t climb the ladder to a functional enough next step up, then you may need to consider moving to a cheaper neighbourhood, which will allow you to get more for your money. Equally, if area is more important than the property itself, flats can be a great option.
Step 3: Getting a Mortgage for Your New Property
Ahead of taking that next step up the property ladder, you will need to find out how much you can borrow (unless you have made enough from the sale of your property to afford your new home). If you currently have a mortgage and know that you need more funding for moving up the property ladder, you will need to look at:
- Whether your current mortgage has any penalties for early redemption.
- If the current mortgage is portable.
- If you’ll need to obtain further borrowing.
- Will there be any penalties if you move whilst you have the mortgage?
Step 4: Consider the Additional Costs
When you climb the property ladder, there are less obvious costs that are also worth being aware of:
YOUR DEPOSIT: Your deposit is the upfront money that you pay when buying your new home. For the most part, the more you’re able to put towards your deposit, the higher chance you’ll have of getting a mortgage and the less you’ll pay in interest. It is likely that you’ll need a deposit that is equivalent of at least 5-20% of the property price.
LEGAL FEES: You will need to use a conveyancer or solicitor to deal with the legal work when you buy and sell property.
ESTATE AGENT FEES: These fees are paid by the seller and are arranged when the property is put up for sale. These fees are generally approximately 1-3% of the sale price.
STAMP DUTY: On top of the normal cost of the mortgage, there are other things that you will need to take into account like Stamp Duty. You must pay Stamp Duty Land Tax (SDLT) when you buy houses, flats and some other purchases over a certain price.
MORTGAGE ARRANGEMENT FEES: These fees can include a booking fee, arrangement fee and mortgage valuation fee. We would advise that you pay these fees upfront as opposed to adding them to the mortgage. By adding them to the mortgage you’ll pay interest on them for as long as you have the mortgage.
SURVEY FEES: A survey can be as simple as a home condition survey or as complicated as a full structural survey and the fees vary to reflect these services.
ENERGY PERFORMANCE CERTIFICATES (EPC): An energy performance certificate shows buyers data on the property’s energy use.
REMOVAL COSTS: You might be thinking about moving your possessions yourself but hiring a removal company can take away a lot of stress and energy. These costs can vary depending on how big your property is and how far you are moving. They may also offer packing services for an extra fee.
Let Transparent Mortgage Services take the stress out of moving home by using our Home Mover Mortgage Services. We can help you review your financial situation, and we’ll look at the mortgage market and find the best deals and interest rates for you as you take the next step towards your ideal home. Contact our friendly team of mortgage advisers today - email info@tms-fs.co.uk or telephone 01424 444 597.
