For those considering moving house over the latter half of 2023 this already daunting experience has been exacerbated by the number of differing opinions surrounding the future of the housing market.
Moving home can and should be an exciting experience, although there are challenges involved even in the smoothest of markets.
Whether you need to move due to relocation, change in family circumstance, upsizing or downsizing the process of moving home requires a lot of thought and planning.
We’ll look to explore the key considerations of moving home including financial options and top tips for a successful move to ensure a more positive transaction.
How much equity do you have?
Firstly, understand the equity you have in your current property. Speak to a reputable Estate Agent who can help you set an appropriate sale price. They will also help with marketing your property efficiently and negotiate offers.
Although selling in a softer market might lead to a lower sale price 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 reduction in your sale price.
How much can you afford to borrow?
Secondly, assess your current financial position and speak to your mortgage adviser to determine maximum mortgage capability along with ensuring comfortable monthly outgoings.
Start by reviewing your current mortgage, you will need to factor in any penalties or fees associated with early repayment.
Your mortgage adviser should be able check your current mortgage details and advise on any potential options to avoid the early repayment penalties.
In these cases, porting is often considered. However, there are instances where porting is not the best option. If you are upsizing there is no guarantee that your current lender will be able to lend the amount you need to be able to buy at the price you want.
Lender’s affordability models can and have changed recently with some now imposing stricter affordability assessments.
Your personal circumstances may also have changed since you set up the current product. If you have changed employment type or the structure of your salary has changed this may mean your current lender will no longer be able to use all elements of the new income.
Assuming porting is an option, and you can increase the level of borrowing to what you require, then there are implications to consider regarding the mortgage product.
You can typically keep the current interest rate on the balance you have outstanding, but any additional lending will need to be taken on a new product. This is because most products have specific end dates and some with early repayment charge periods.
This may mean you have two separate products with the same lender where the interest rate on one part expires sooner than the other. In these instances, you may have an early repayment charge to consider in the future.
What additional costs should you factor in?
Whilst assessing your current financial position, factor in costs associated with a sale and purchase – agency fees, legal costs, surveys, moving costs and stamp duty.
Once you have a figure of the available equity plus the mortgage capacity you can then determine a budget and realistic price range for your new home.
What practicalities should you consider?
Keep a long-term perspective – in an ideal world you would want to sell at the peak of a market and buy at the low. Realistically this just isn’t possible as, of course – you need somewhere to live.
Assessing your current and future lifestyle needs will help to determine if moving home aligns with yours and/or your family’s long-term goals and improves your quality of life.
If so, then moving is a good option, regardless of market conditions. Waiting for that ‘ideal market’ may mean you miss out on desired properties and if you intend to stay in the new home for an extended period, then short-term fluctuations of the housing market will have less impact on your decision.
In this rising interest rate market downsizing can be beneficial for those who are stretched financially.
Often downsizing can mean reduced costs associated with a smaller property. You may be able to clear some of the mortgage debt, and benefit from lower property maintenance costs as well as lower day to day costs such as utilities and council tax.
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Moving home – advice at a glance
Planning and organisation are essential elements to any house move. Here are some top tips to ensure a smooth transition
Engage a mortgage adviser with a good reputation who can keep you up to date with product movement and provide the widest range of options for you.
Get your paperwork together – you will need to ensure you have valid ID documents as well as proof of income and bank statements.
Instruct a well-established local estate agent to act on your behalf, they can help negotiate deals and ensure you are getting the most equity out of your current home.
Ensure you have a proactive conveyancer on side to deal with the legal side of the sale and purchase
Create a detailed moving list including tasks such as updating utilities, redirecting mail and scheduling movers, if needed
Start packing in good time keeping essential items easily accessible
Taking these proactive steps in planning your move will help to minimise stress and ensure a smooth relocation.
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How to get the right support
Finally, the decision to move home is an emotional process and depends on your unique circumstances.
There is currently a lot of headlines with varying opinions on the market, but by engaging your team of mortgage adviser and estate agent they can provide tailored advice based on your specific requirements.
We continually find clients positively surprised with what is achievable in terms of borrowing and property availability.
Stephanie Daley is director of partnerships at Alexander Hall
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