There are a lot of things to consider when you decide to move. Buy or sell first? Take your mortgage with you or get a new deal? Use an estate agent or sell yourself? Fortunately, the mortgage side of things can be relatively straightforward with help from a First Mortgage advisor. We will guide you through the process step-by-step and make sure everything stays on track.
The prospect of selling your home can be daunting – even more so if you are looking for another property at the same time. Then there’s your mortgage to consider: keep it and take it with you or look for another deal? We can take the hassle out of the process by explaining all your mortgage options. And even if there are bumps in the road, your First Mortgage advisor will be there every step of the way.
Mortgages and moving home
In a lot of cases, you can move home and your mortgage at the same time. This is known as porting your mortgage (we’ll look at this in more detail below). If you bought your first home with the help and advice of a First Mortgage advisor, you’ll know how useful it can be to have someone who looks after the whole mortgage process on your behalf. This is perhaps even more important when you are buying one property and selling another, as there are more links in the chain and greater potential for snags.
Buying and selling
One of your first decisions when you have chosen to sell up and buy a new property is whether to sell before you buy. Selling before buying puts you in a much better negotiating position as you’ll be chain free and clearer about what price you can offer (more about working out what you can afford in the next section Planning to Buy).
However, despite reducing the time pressures of buying a new home, you’ll need to rent for a while, move twice and possibly pay for storage for your belongings. House prices could change before you buy – if they go down you’ll be in a better position to buy, but if they go up you may not be able to afford what you could have when you sold.
Another option, if you have sufficient equity in your property, is to keep the house you are in as a Buy-to-Let and then buy another. Your First Mortgage advisor can look at whether this is possible and what you need to do to change to a Buy-to-Let mortgage or get a permission to let on a standard mortgage.
If you buy first, before you sell your existing property, there is some guesswork involved in how much you can afford – you have to make assumptions on how much you’ll be able to sell your property for. Whenever you decide to sell, you’ll need to decide who sells it – you could choose to do this yourself or use an estate agent – and what price to market it at.
There are a number of ways to help establish the selling price:
• a valuation from several estate agents,
• reviewing what similar properties in the area have sold for recently,
• and online searches that compare prices.
If you’re selling in England, you might want to add a percentage on to the asking price as buyers are likely to negotiate. In Scotland, where the usual practice is to ask for offers over, the best guide is to see what the prevailing market is doing and set your starting price appropriately.
Preparing your home for sale
The key to selling your home quickly is to help people imagine what it would be like to live there and how comfortable it would be. Here are some simple and inexpensive things you can do to make that happen:
Declutter – but don’t depersonalise
People are often buying into a lifestyle as much as a property, so show them your best side. Get rid of all the excess ‘things and stuff’ that have accumulated in every nook and cranny. Put it in storage, give it to a friend or take a trip to the tip. But don’t make it look like a bland hotel – leave some personality in there. It gives unimaginative buyers inspiration for what they might like to do.
Paint, fix and clean
Giving your walls a fresh lick of neutral paint will make your home seem lighter and bigger. There’s no need to go for a complete makeover, but getting rid of any bold colours will widen its appeal to people. Make any necessary minor repairs too, as many buyers want to move in without needing to make any fixes. Clean everything so that the place is as fresh as a daisy, and tidy up the garden to show it in its best possible condition.
Update the kitchen
The kitchen is the most valuable room in a house. If you have slightly more to spend before you move, consider giving the kitchen a facelift. From simply decluttering the surfaces and removing bulky appliances, to replacing the cabinet doors, work surfaces and flooring, it’s worth investing the most time and effort in the kitchen.
Cosmetic finishing touches
Make your house feel light and airy by cleaning the windows, adding soft lamps to rooms and using wall mirrors to make rooms seem larger. Dress windows with curtains or blinds to make them look cosy. Plants, fruit bowls and flowers bring colour, life and light to a room and smell wonderful.
Bad smells are the single biggest turn off for prospective buyers, so light a fire or burn a scented candle. But don’t just cover them up – fix the source of the smell! Clear drains, wash bins, open windows, air the kitchen from old cooking smells, get rid of furniture that is embedded with cigarette smoke, and wash the bedding.
Let your estate agent show your house
They’ll know what buyers are looking for and how to present your home in a positive light. They can also field any tricky questions and won’t take offence if prospective buyers don’t share your taste.
Porting your mortgage
Many mortgages are portable, which means you could take your mortgage with you when you move to a new house instead of getting a new one. Porting is a useful feature of a mortgage and it may seem like a straightforward option, but there are no guarantees that your lender will let you move – and even if you do, it may be at an undesirable rate.
Why you may not be able to port your mortgage…
You might not still qualify
The lender of your current mortgage deal might ask you to reapply if your circumstances have changed. This means they can assess your life as it is now and how likely they think you are to repay the loan going forward. Even if your circumstances haven’t changed at all, the lending criteria might have, meaning you no longer qualify. It can be much harder to get a mortgage now than it was a few years ago, so this may count against you.
You might not be able to borrow more
If you’re moving to a bigger property, chances are you’ll want to borrow more money. The lender may not be willing to lend you any more, especially if you were near to your maximum borrowing limit when you took out your original deal.
You might have to get two loans and it will cost more
If your lender is willing to lend your more money so you can move to a bigger, more expensive property, they may ask that the additional amount goes on to another mortgage product. This will probably mean you must pay an arrangement fee to set it up and a higher rate of interest to borrow the extra amount.
You might have to borrow at a poorer rate of interest
If you choose to stay with your lender and keep the same mortgage, you’ll be restricted to the rates of interest they offer. These might not be as competitive as others available from alternative lenders.
To port or not to port?
Given all the possible drawbacks of porting your mortgage listed above, you might believe it’s better to start afresh with a new deal. However, if you don’t need to borrow any more money – if you’re downsizing or moving to a cheaper area for example – then porting could work in your favour.
Whatever your circumstances, it’s worth treating your move as an opportunity to review whether you’re on the best deal you could be and to compare what it would cost to stay against the cost of moving to a new deal. The important things to consider are:
Whether there is an early repayment charge…
If you are still in the earliest phase of a fixed rate deal – usually the first two years – you’re likely to have to pay an early repayment charge. These are usually 1% – 5% of the amount you have left to pay, though it varies depending on how long you’ve had your mortgage for. After the introductory offer is over you’re less likely to have to pay a fee to come out of the deal early. It’s advisable to check this as it could end up costing you a few thousand pounds.
The exit fee
When you pay off a mortgage, you usually pay an exit fee – also known as a deeds release fee or final fee. This is probably a few hundred pounds. You may have paid it up front when you took out your original mortgage, so do check if this is the case.
How much it will cost to set up a new loan…
When you take out a new mortgage you usually pay fees to set up the loan and for a valuation on the property you’re buying. You’ll need to factor in these costs, too.
What happens next?
When you know about all the fees and repayment charges it will cost you to leave your mortgage and set up a new one, you can compare them with how much it will take you to port your existing loan on to a new deal.
Your First Mortgage advisor can go through this with you to check you have considered every cost of both option and help you decide what works best for you.
Whichever option you choose, you’ll need to run through the mortgage application process. Our advisors can do this on your behalf, with no fee. Check out our step-by-step guide and see a reminder of what you need to bring with you.
Advisor insights: “Compare costs”
John, FM advisor, Falkirk
“When you’re planning to move house it’s worth checking the mortgage agreement you have on your current property to see if you can port it to another one. This is something we can look into for you, as well as assessing the cost of porting (possible greater interest rate but less fees to pay) versus the cost of leaving and setting up a new deal (likely to be a better interest rate but fees involved that might cancel this saving out). It’s down to the figures and what lenders can offer you, and with our whole of market perspective, we are well placed to advise you of the best way to go.”