Although buying your first home can be stressful, there's a wealth of information about how to get on to the property ladder available out there.
But what about second-steppers? Buying a second home can sometimes feel like you’re on your own this time, and with no Help to Buy schemes on offer, it can seem very daunting. So, here’s our top tips to make sure buying your second home goes as smoothly as possible.
Get your home on the market
First things first, if you want to move out at all, you’ll probably have to sell your current home. Unless you have a large lump of cash headed your way, you will need to sell your home to raise the money necessary to take the second step.
Usually, you’ll have to complete the sale of your current home and the purchase of your new home on the same day, which can be quite stressful! So, you’ll need to start searching for your second home while marketing your current one to new buyers. And while you can make an offer on a property before you’ve received one for yours, you’ll be in a better position if you’ve found a buyer, as the seller of the house you’re interested in will have greater assurance that your end of the chain is moving smoothly.
If you manage to sell your property before you’ve finalised the purchase of your second home, you might have to think about alternative places to stay. This can be stressful, as you may have to depend on renting – which can be costly – or living with relatives temporarily. And unless the place you’re staying in has room for all your stuff too, you may have to pay for storage facilities to keep your belongings in, so it’s worth bearing this expense in mind when considering your budget.
Check your credit history
Even if you only stayed at your first home briefly, your credit history will have changed during this time. If you’ve made all your mortgage payments on time, your credit history should have slowly improved – providing you didn’t miss any other credit commitments like a credit card or loan repayment in the meantime.
Your credit history will play an important part in your house move, as it will influence the deals you are offered on your next mortgage. Of course, it’s wise to speak to your lender first to go through the possibilities of porting your existing mortgage. In many cases your mortgage should be fully portable, but often moving home means you would be better off searching the market to find a more suitable deal.
Consider searching for a better mortgage deal
If, after speaking to your lender, you find that you wish to port your mortgage to your new home, you’ll have to carry out a valuation of the new property and you may have to borrow more money to secure your new home. Usually, you have to pay a fee to transfer your current mortgage to your new house, so it’s worth bearing this in mind.
Before you jump the gun and proceed to port your mortgage, it’s a good idea to weigh up your options. If your credit history has improved, you could have access to a new mortgage deal that works out cheaper than your current one, and some may even be cheaper than paying the fees to port your existing mortgage. But, remember that your existing mortgage provider might penalise you for exiting your mortgage early (if you’re not moving on a date to coincide with its end), so it’s certainly worth checking this before you scout out a new deal.
It’s usually recommended you complete your mortgage application once you’ve got an offer on your property. You could consider using a mortgage broker like Ocean for your next mortgage, as this allows you to compare deals from a panel of lenders to find the most suitable one for you.
Weigh up the costs of moving
It’s easy to forget about the costs involved in buying a home when you’ve been living in your first for a while, but it’s important not to overlook this as it can be quite pricey.
Alongside survey and conveyancing costs, and a deposit to exchange the contracts – typically around 10%, although it can vary and is often less – you may have to fork out for estate agent fees too. You can find a full list of potential moving costs here.
If the property you’re buying costs more than £125,001, you’ll have to pay stamp duty. Below we’ve listed the different stamp duty thresholds and how much you’ll have to pay.
0% on properties costing £125,000 and less.
2% on properties between £125,001 and £250,000.
5% on properties between £250,001 and £925,000.
10% on properties between £925,001 and £1.5 million.
Don’t forget, you’ll likely have to fork out for the removal costs too! Just how much you will have to pay varies depending on the size and number of your belongings, but you’ll have to factor in paying for a removal company (unless you plan on doing it yourself) and vehicle hire. In some cases, you may have to pay for temporary storage while you wait to move into your new home.
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Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender.