A home mover, unlike a first-time buyer, has a property to sell to usually buy their next property, so there is what they call a ‘chain’.
Moving home can be a daunting thing. With 57% of Brits saying it’s the most stressful life event, we thought we’d put together a guide of simple tips and tricks to help home movers make the process as stress-free as possible.
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Selling your current property
If you are planning on using the equity in your property as a deposit, your first step is to get your current property valued by an estate agent to see how much equity you can use.
Your equity is the property value minus any charges against the house (such as a mortgage). For example, a property valued at £200,000 with a £50,000 mortgage would give you £150,000 in equity (before any legal fees are deducted).
Before deciding to move house, you will need to sell your current residential property, otherwise, your new purchase will be classed as a second home and will incur higher Stamp Duty Land Tax charges.
Home mover with a mortgage
If you are a home mover with a mortgage, you can repay your current mortgage upon the sale of the property. If you are in a fixed-rate deal, you may have to pay early repayment charges.
So, before putting an offer in on a new property, the first factors you want to consider are:
Is your mortgage portable?
A portable mortgage is one that can be transferred from one property to another. This prevents the owner of the mortgage from having to pay early repayment charges if their fixed-rate term has not yet ended.
If your mortgage is portable, you can transfer it to the new property and carry on paying the same monthly premiums, as long as the mortgage required to buy the new property is the same as your current one.
Is the new property more expensive?
If the new property is more expensive, you will need to ‘top up’ your mortgage. Topping up your mortgage means adding more loan to your existing mortgage. Because you are porting and keeping your original rate on the original loan, the top-up will be on its own rate and classed as a separate loan.
For example, if your original mortgage was £100,000 at 2.5% and you needed £150,000 to buy the new property, the additional £50,000 would be on a new interest rate and new monthly repayments.
When topping up, your lender will carry out new affordability assessments to see if you can afford the new loan. It’s best to request this assessment before you put an offer in, to prevent any delays or failed offers.
Are you going to pay your current mortgage off and get a new one?
If your current lender won’t allow you to borrow the additional amount, or another lender is offering a better rate, it may be better to pay your current mortgage off and take out a new one.
This route can be beneficial, as it may allow you to take advantage of another lender’s criteria, but it could also cost more in legal fees.
Legal fees to consider
With any property transaction, you will need to pay legal fees, as conveyancers must carry out land searches, checks, and administration on both your current property and the one you’re buying.
Make sure to research your conveyancer. Ask friends, family, and colleagues for recommendations, as a good solicitor can make the process much smoother, and sometimes even save you money.
If you have a mortgage, you may be able to remortgage for free, as some lenders offer free legal services when remortgaging.
Stamp Duty Land Tax for a Home Mover
With any residential purchase (if you are not a first-time buyer), you may incur Stamp Duty Land Tax. Stamp Duty Land Tax (SDLT) is a tax you pay when you buy property or land in England or Northern Ireland. It applies to both residential and commercial purchases over a certain price threshold.
For home movers, the threshold is £125,000, with anything above that taxed at 2%. For example, a £150,000 property would incur £250 in SDLT (2% of £12,500), so you’ll want to incorporate this into your budget.
You must pay Stamp Duty Land Tax within 14 days of completion.
Tips for a Smooth Move
Budget properly
Include legal fees, surveys, removals, stamp duty, etc.
Plan early
delays often come from legal or mortgage processing.
Communicate often
stay in touch with agents, solicitors, and your mortgage adviser.
Declutter before packing
makes moving day easier and your home more sellable.
Frequently Asked Questions
What is Stamp duty Land Tax?
Stamp Duty Land Tax (SDLT) is a tax paid to HMRC when you buy property or land in England or Northern Ireland above a certain price threshold. The amount you pay depends on the property’s purchase price, whether you’re a first-time buyer, and if you’re buying additional properties.
Do You Need a Mortgage Adviser For a New Mortgage?
Whilst getting a new mortgage does not require a mortgage advier, it is always reccomended as they will be able to source you the best deal.
What are The Costs To Selling Your House?
When selling your home, you will incur solicitors fees, estate agent fee’s and potentially mortgage fees if you pay your mortgage off early.
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