Buying Your Next Home – MBD
Do you need to sell first?
You are a homeowner and have decided to start looking for your next house. This guide will walk you through all the steps that you might need.
You should sell your home before you start looking for a new place. This is the most important decision you will make. Some people decide to sell their existing property first and then move into temporary housing before searching for their next home. This approach has many advantages.
Cash buyers can be a great option for you when you are negotiating for your next home. You can make a firm offer, and there is no downward chain. The process will be faster and you may be offered a lower price.
However, there are some drawbacks to this method. With the associated inconvenience and costs, you will need to move into a different (possibly rented) place. Your purchasing power will decrease if property prices rise, as you have cash from the sale of your home. This strategy may work in a declining property market.
You can also complete your sale and purchase simultaneously, which is the preferred option. Learn more about conveyancing.
Discuss this question with your mortgage advisor, who will be able to give you advice on the pros and cons of your situation.
Selecting your next home
Another important question to ask yourself is “Why do you want to relocate?” It may be that you want more space or better schools, but you need to keep your eyes on the important things when you are home-hunting.
Moving home can be both expensive and stressful. You should plan ahead to make sure that the home you choose is suitable for your needs for at most five years.
Think about what you’re leaving behind. Are you accustomed to taking things for granted, such as good public transport, in your new area? Before you commit to moving to a new place, do your research thoroughly.
This is especially true for those who are downsizing. Are you willing to move into a smaller home or one in a less desirable location? Will it be worth the cost of moving?
Before you sign any contracts, it is a good idea to hire a chartered surveyor. For more tips on house hunting, follow this link.
Your New Mortgage
A new mortgage is required to buy your next house. You can often transfer your existing mortgage (or ‘port’) to your next home, but you will still need to apply for it again. If the property is larger than your home, you might need to borrow more money. This factor will affect any mortgage deal that you might be offered.
Your current home might have equity, which is a plus. This is the difference between the property’s value and what you owe on your mortgage. Your equity could serve as your deposit. However, depending on the property’s price, you may still need additional savings.
If you are downsizing, your equity may be enough to pay the entire cost of the new home. In this case, you won’t need a mortgage again and your existing one will be paid off.
Your mortgage advisor can help you find the best deal for your next home. You can also use our mortgage calculator to find out how much you could borrow and what it would cost you per month.
Stamp duty land tax, also known as stamp duty, will likely be required on your purchase. You should factor this in as it can add a few thousand dollars to your purchase costs.
You should be aware that stamp duty will increase by 3 percent if you buy a second property.
This calculator will help you estimate how much stamp duty you’ll have to pay when you move.
The rules in Scotland and Wales are different. The tax in Wales is Land Transition Tax (LTT), while it is in Scotland Land and Buildings Transition Tax. These calculators are better:
LLT calculator (Wales)
LBTT calculator (Scotland).
Sell Your House
Although it is possible to sell your house online, most people still prefer an agent. The estate agent will work for you and charge you a fee, usually 0.75 to 3% of the sale price plus VAT. Their job is to get your home sold quickly and at the highest possible price. But, more always, there are better agents than others.
You will need to hire a solicitor for conveyancing, just as when you buy. This is usually the same person who handles your purchase. However, it doesn’t always have to be. Keep in touch with your mortgage advisor throughout the entire process. The price you agree to for your sale could impact how much money you can borrow on your next mortgage and the type of deal that you can get.
Some people sell their homes to buy another home. Some people sell their homes and use the income to repay their mortgage. Others can afford multiple homes. Both of these situations result in higher stamp duties on your purchase.
Being Part of a Chain
A ‘chain’ is often used to buy a house. Your home buyer may also be looking to sell it, while your seller might also be looking to buy. Sometimes, both. It is more difficult to achieve a successful outcome if there are many sellers and buyers in the chain. This is because a seller or buyer can pull out of the chain.
You should look for houses that have shorter or no chains. This is the best way to sell your home first. It will make you the end of any chain when you buy your next house. This will allow you to negotiate lower prices.
Your solicitor and mortgage advisor are your best friends when you’re part of a chain. They will be there to tie up any loose ends and chase people to make your sale or purchase as smooth as possible.
Once your offer has been accepted, conveyancing (or buying and selling) can begin. It is possible that you will need to visit your solicitor several times in person and give over important documents. It is better to find one local.
Your solicitor will ensure that both your purchase as well as your sale are legal.
Your solicitor will manage the chain of events to make sure everything goes smoothly. However, it is not a bad idea to chase them down. They will help you negotiate the moving date, exchange contracts, and transfer all money to the right person on the big day.
You will need buildings insurance before you can move into your new home. This is in case anything happens after you have exchanged contracts.
You must keep your existing property insurance in force until you sell it. This is to protect yourself from any potential damage that may occur during the move. You can cancel your policy with your insurance company after completion. They may even give you a full refund. You can ask your solicitor to tell you how long you should keep your insurance in force and whether you still need it.
Although life insurance is not mandatory, it is often essential. This means that your mortgage will be paid in full if one of the mortgage holders is unable to pay it. Your family can continue living in their home. This can be done by your financial advisor.