Your home is one of the biggest purchases of your life and buying your next property can be just as daunting as your first. Therefore, we have listed 7 key steps to buying your next home.
- Selling your property
There are two approaches which you can take to selling your property. Some opt to sell their property before looking for somewhere new. This is a huge decision, as you may be required to move into temporary accommodation, and this comes with its advantages and disadvantages.
If you are a cash buyer this can put you in a great position to negotiate on your next home and the entire process could be a lot quicker. However, as you may need temporary accommodation throughout this process, this could lead to further costs and inconveniences. As the sale of your home is now in cash, the rise and fall of the property market will also decide your purchasing power for your next property.
The other method to selling is to complete your sale and your purchase at the same time.
- Making the right move
It is important that you ask all the same questions when searching for a new property, as you did when you were buying your first. What makes this the right move for you?
Moving to a new house is a big decision and comes with inevitable costs, therefore have you considered what you are leaving behind and if your new location can match or improve your current circumstances.
If you are considering a property, make sure to hire a chartered surveyor to report on the property before you exchange contracts.
- New home, new mortgage
When you buy your next home, this usually means taking out a new mortgage. This will lead to a transfer (‘port’) of your current mortgage to your new property. However, this won’t happen automatically, and you will need to reapply. If the property you are buying is more expensive than your current home, you may also need to borrow more money.
On the flip side, your current home may now have some equity. Home equity is the portion of your property that you truly “own.” You’re certainly considered to own your home, but if you borrowed money to buy it, your lender also has an interest in it until you pay off the loan. Depending on the price of your next home, the equity from your previous property may be able to cover your deposit or the full cost of your next home.
It is best to talk to a mortgage adviser about your next mortgage, as they will be able to help you find the best deal available.
- Stamp Duty
It is likely that you will have to pay stamp duty on your next purchase. This is a percentage paid on the purchase of a home or non-residential property to the Inland Revenue.
Stamp duty is charged in bands. Nothing is paid on the first £125,000 of your home’s purchase price, then charges increase based on what band you are in. If the price of your new home is under £125,000, you must still submit a return (unless exempt) even though you won’t need to pay any Stamp Duty.
- Selling your home
The majority of people use an estate agent to sell their home, however, it is also possible to do this online. Make sure to do your research before choosing your estate agent, as you will want to pick one who’s fees you are comfortable with and one that can achieve a timely sale at the best price.
Throughout this process, it is best to engage with a solicitor to handle the conveyancing and also your mortgage adviser. Your mortgage adviser will need to know the price that is agreed so that they can calculate how much you need to borrow and what kind of deal you can get on your next mortgage.
The buying process often happens as a chain. The seller of the property you are trying to buy could also be in the middle of purchasing a house or the buyer of your property may be trying to sell their current home. The chain can become complicated and a successful outcome less likely with more buyers and sellers involved.
This is were your mortgage adviser and solicitor come in handy. They will help make this process smoother and easier by tying up loose ends and chasing people for you, in order to achieve a quick purchase.
- Offer accepted
Once your offer has been accepted, conveyancing can begin. Conveyancing is where your solicitor will ensure that your sale and purchase are fully legal; they will negotiate moving dates, exchange the contracts and transfer all the appropriate money when necessary.
There are different types of insurance that you should consider when purchasing a new property. You will need to sort buildings insurance for your new purchase, in case something happens to the property after it becomes legally yours. It is also best to keep your buildings insurance in place while moving, in case you become liable for any damage to your current property.
Your mortgage adviser may also advise you to take out a life insurance policy. Although this is not compulsory, you will find that it is essential if the worst were to happen to one of the mortgage holders. In the event of death, life insurance will ensure that your mortgage will be paid off so that your family can remain in the home.
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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR OTHER LOANS SECURED ON IT.