Is it time to move houses right now?
Moving is a major decision even in the best of circumstances, let alone under the present circumstances. In order to ease your big move, Stephanie Daley of Alexander Hall walks you through everything you need to think about.
The quantity of divergent viewpoints regarding the home market’s future has made moving a task that was already difficult for anyone thinking about doing so in the second half of 2023.
Even in the most stable of markets, moving can be challenging but it should be an enjoyable experience.
Moving homes involves a lot of thought and planning, regardless of whether you need to relocate due to relocation, a change in family circumstances, an upsize or downsize, or any other reason.
To create a more enjoyable experience, we’ll discuss the important moving-home factors, including financial possibilities and moving-home success recommendations.
Your equity is how much?
Recognise the equity you have in your present property first. Consult a trustworthy estate agent who can assist you in determining a suitable sale price. Additionally, they will negotiate offers and assist in effectively marketing your property.
Remember that when you are upsizing a 5% decrease in your sale price may lead to a 5% reduction in onward purchase price; if you are buying at a higher price then that 5% reduction is higher in monetary terms compared to the decrease in your sale price. Selling in a soft market may result in a lower sale price.
How much money can you borrow?
In order to estimate your maximum mortgage potential and to guarantee pleasant monthly outgoings, first evaluate your existing financial situation. Then, consult your mortgage expert.
Start by analysing your current mortgage; remember to account for any early repayment penalties or costs.
Your mortgage advisor ought to be able to look over the specifics of your existing mortgage and offer advice on any possible ways to avoid the early repayment penalties.
Often, porting is taken into account in these situations. There are circumstances, nonetheless, in which porting is not the best choice. There is no guarantee that your existing lender will be able to provide the financing you require to be able to purchase the home you want at the price you want if you are upsizing.
The affordability models used by lenders are subject to change, and some have lately implemented tighter affordability tests.
Also possible is that since you configured the present product, your personal circumstances have changed. Your present lender may no longer be able to utilise all components of the new income if you have changed work types or the structure of your wage.
If porting is an option and you can increase borrowing to meet your needs, there are ramifications for the mortgage product to take into account.
On the balance you currently owe, you can usually preserve the present interest rate; however, any further loan will require the use of a new product. This is due to the fact that the majority of items have set expiration dates and others have early payback fee periods.
This could imply that you have two distinct products with the same lender, each with an interest rate that expires at a different time. In these situations, you might need to think about an early repayment fee in the future.
What extra expenses need to be taken into account?
When evaluating your present financial situation, consider the costs of a sale and buy, including agency fees, legal fees, surveys, moving expenses, and stamp duty.
You may set a budget and a reasonable price range for your new house after you know how much equity is available and how much you can borrow.
What practical considerations are there?
Maintain a long-term perspective. Ideally, you would sell at a market’s top and buy at a market’s bottom. Realistically, this is simply not feasible because you obviously need a place to reside.
Finding out if moving into a new home is in line with your long-term goals and/or the long-term goals of your family will depend on how your current and future lifestyle demands are assessed.
If so, relocation is a wise choice regardless of the state of the market. If you wait for the “ideal market,” you can miss out on desirable houses. However, if you want to live in your new house for a while, short-term changes in the housing market won’t have as much of an effect on your choice.
For those with tight budgets, downsizing may be advantageous in this market of rising interest rates.
Downsizing frequently results in lower costs for a smaller property. In addition to saving money on day-to-day expenses like electricity and council tax, you might be able to pay off some of your mortgage debt.
How to obtain the best assistance
Finally, deciding to move back home is a personal choice that is influenced by your particular situation.
There are many stories with differing viewpoints in the news right now, but by working with your team of a mortgage adviser and an estate agent, they can offer guidance that is specifically customised to your needs.
Clients are consistently pleasantly surprised by what is possible in terms of borrowing and the availability of properties.