How to Buy your Next Home
Buying your next home is a really exciting time in your home ownership journey! With a foot on the property ladder, you already understand the ins and outs of buying a home and are probably well acquainted with apps like Zoopla, and property viewings that take up your whole weekend.
How to buy your next home
Now it’s time to kick-start the preparation again, but this time, there are a few extra key points you’ll need to check off your list. Here are the 7 simple steps to follow to move up the property ladder and buy your next home.
Decide when to put your home on the market 🏠
When buying your next home, you have two options. You can either sell your current home before buying your next and move into temporary accommodation in the meantime, or try to complete both transactions at once. Selling first can put you in a competitive negotiating position, as you won’t be in a chain – where your purchase is dependent on the timing of your house sale. This also means you won’t be rushed in the process. However, moving into temporary accommodation (for example, renting a flat or moving in with family) can add an extra layer of inconvenience or cost. Completing your sale and purchase at the same time ensures you only have to move once, although it might be challenging to time everything correctly.
If you’re selling, the first step is to get your property valued and put it on the market with the right estate agent.
Check your mortgage T&Cs 🏦
To avoid any surprises, check your mortgage paperwork as early as possible. You might be able to ‘port’ your mortgage (take it with you when you move home) but it’s wise to confirm with your lender first. If you’re planning to move to a more expensive property or your mortgage deal is ending soon, consider whether changing to a new mortgage with your current lender or a new lender would be a good move. A mortgage adviser can help find mortgage options that are right for you. Just make sure to find out if you’d be subject to any early repayment charges or exit fees, as these can be costly.
Budget for the costs of moving home 💰
Moving up the property ladder brings a range of costs. Depending on your chosen lender, conveyancing solicitor, and estate agent, how much you have to pay in fees will vary. Here are the main ones to plan for:
Estate agent fees:
Expect to pay between 1% and 3% of the agreed sale price plus VAT, although fees can often be negotiated. You only pay estate agent fees on the property you’re selling.
Conveyancing fees:
Expect to pay between £700 and £1,500 to cover conveyancing on your sale and purchase. You can save money by comparing quotes from a few different firms.
Mortgage fees:
Besides any early repayment charges or exit fees, you may have to pay standard fees to set up your new mortgage. These could be up to £1,000.
Mortgage adviser fees:
Some mortgage advisers charge a fee for their advice – be sure to check with your adviser before committing.
Home improvements:
If you’ll be doing any repairs or renovations – either to increase the value of your current home or improve your new home – make sure to factor these costs into your budget.
Energy performance certificate (EPC):
It’s a legal requirement that you have an EPC for the property you’re selling. You can get a copy of your EPC online:
If your property doesn’t have one, you’ll pay around £100
Moving costs:
Removal costs vary, on how many items you have to move and how far. You can save money by comparing quotes from a few different firms and booking in advance.
Stamp duty:
Stamp duty is often the biggest upfront cost involved in the home-buying process. Check out our stamp duty guide to work out how much you’ll pay. If you’re buying a second home, or keeping your current home to let out to tenants, you’ll pay 3% extra stamp duty on the property you’re buying. You can always find the latest information on the government websites:
England and Northern Ireland: Stamp Duty Land Tax (SDLT)
Wales: Land Transaction Tax (LTT)
Scotland: Land and Buildings Transaction Tax (LBTT)
Find and finance your new home 👀
It’s time to work out how much you can afford to spend on your next home. Buying your next home usually means taking out a new mortgage (if you’re not porting your current mortgage or a cash buyer). How much equity do you have in your current home to use as a deposit? If the new property is more expensive, you may have to borrow more. You can calculate how much you’ll need to borrow at this point by using a mortgage borrowing calculator or speaking to a mortgage adviser. With Moneybox Mortgages, you can get free, impartial advice and access to over 90 lenders.
Once you know what you can afford, you can start the exciting task of looking for your next home. You might want to downsize to free up equity, look for a bigger or more expensive property, or simply relocate. Think about what you want from your next property and remember your budget. Unless you’re a cash buyer, your property must usually be sold subject to contract before you can make an offer on another property. Once you’ve made a successful offer, consider if you want to order a home survey for more details on the condition of the property. You’ll also apply for your mortgage at this point.
Conveyancing 💼
Once you’ve found your dream home, you’ll need to appoint a conveyancing solicitor to look after the legal side of both transactions. You’ll complete forms and questionnaires to give the person buying your property all the relevant information and terms of the sale and negotiate on the fixtures and fittings you’re including with the property. Your solicitor will arrange searches for the property you’re buying and draw up contracts ready for you to review and sign.
Exchange contracts 🎉
It’s important that you and everyone else in the chain is happy to proceed before you exchange contracts and the transactions become legally binding. You’ll agree your completion date with the rest of the chain and contracts will be exchanged by your solicitors. When selling, you’ll need to ensure your current property has valid buildings insurance cover until after you’ve moved, but you may be able to get a refund later on. You’ll also need to organise buildings insurance on the property you’re moving into, if it’s not included in your service charge.
Completion 🏡
Today’s the day! Completion will take place on the date you agreed when exchanging contracts, normally around midday. You’ll receive and pay your completion statement, which covers your solicitor fees, the searches and any stamp duty payable. Your solicitor will transfer funds and register the change in ownership with the Land Registry. You’ll get the call when completion has happened, and will need to move out before your buyer collects the keys and moves in. Your final step is to collect the keys to your new home and move in. Congratulations on your new home and achieving your next step on your home-buying journey!