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Top tips for moving house – what to do and when to do it

Mortgages

Moving house is one of those things that causes incredible upheaval in your life. If you’re thinking of moving it’s a good idea to get it clear in your mind – before you start – what you’re going to have to do, and in what order. This can help to reduce some of the stress later on.

We sometimes get calls from clients who’ve seen a house they’ve fallen in love with and want to go ahead and buy it when they haven’t sold their own house and they can’t afford to do this. These people sometimes talk about taking on bridging loans (to allow them to own two properties at once) – this is very risky, very stressful, and can all too easily end in tears.

So this guide is designed to give you an overview of what you should do and in what order. These ‘Sladey top tips’ are aimed at people who are selling and buying – for first time buyers I’ll do a separate guide.

Overview

Here’s an overview of the order in which ideally you should be doing things

Step 1 – What can you afford?

Step 2 – Do you want to Move? (and some cautious looking around)

Step 3 – Sell your house

Step 4 – Look for one to buy

Step 1 – What can you afford?
So you’re thinking of moving house – what next? Well the first thing is to find out what you can afford – there’s no point in looking at Madonna’s old place when you won’t even be able to afford the heating bills.

Generally, what you can afford, will be made up of the following:-

1. How much money you’ve got in your existing house (so if you sell it and pay off the mortgage, how much money you’ve got left over) – this is known as the equity in your house
2. How much money you’ve got saved up – if you want to use those savings on the new house
3. How much money you are going to borrow on a mortgage.

There are two main unknowns here – firstly how much money you’ve got in your existing house (because you don’t know how much your house is worth), and secondly how much money you can borrow on the mortgage (because you don’t know how much a bank or building society will lend to you).

1. How much money you’ve got in your existing house
The best way to find this out is to get a valuation of your house carried out by an estate agent. They will still generally give you a free market appraisal type valuation – i.e. what they think you’ll be able to get if you sell your house now. Obviously this is only their opinion but they should have a better idea than most of how much your house will sell.

If you don’t feel like getting an Estate Agent into your house then you can also do your homework yourself online – there are a number of sites where you can tell how much properties sold for. Two I’ve used are http://www.nethouseprices.com/ and http://www.houseprices.co.uk/ – they both get their data directly from the Land Registry (the amount that people paid for their property is now public information that anyone can look at). Don’t forget if you’re looking at these sites it’s just raw information – you have to look at the actual properties sold as well and decide if they are worth more or less than your home. You also have to consider when they were sold – property prices were on the rise for so many years, but fell back during 2008. In our experience they’ve now bottomed out, so it’s a very good time to buy, as chances are they’ll never be this cheap again.

Knowing how much your house is worth is only part of the equation – most people have a mortgage on their property and you need to take into account how much it will cost to pay this off. You should try and get hold of your most recent annual statement from your mortgage company (they send this to you each year and it shows how much you owe on the mortgage). You also need to bear in mind if you’re still in any ‘special rate’ periods. This normally affects you if you’ve had a mortgage in the past on a special rate – e.g. 1% over base or a fixed rate. In order to give you this special deal the mortgage company usually stick in a penalty clause – so that if you pay the mortgage off within a certain period of time you’ll have to pay a penalty. The details of how much you have to pay will be on the original loan documents that you signed when you took the mortgage out (if you can’t find these then you might be able to get a copy from the solicitor who acted when you mortgaged, or by contacting the mortgage company themselves).

These penalty payments can be a nasty surprise if you’ve forgotten about them – they usually run into the thousands. If you’re near the end of the penalty period it’s usually worth waiting until it’s run out before you pay the mortgage off – in such cases paying your mortgage off just one day early can cost you thousands of pounds.

So from getting a value on your house and working out how much to pay off your mortgage you’ll be able to work out the equity you’ve got in your house (i.e. how much money you’ve got tied up in it)

2. Money you’ve got saved up
You presumably know this already – if you don’t then maybe you’ve got a bit too much!

3. Money you can borrow on a mortgage
Again this is something you’re not going to know off the top of your head. The mortgage market has been in massive turmoil since the start of the banking crisis and it’s a completely different world to just a couple of years ago. However, contrary to what the papers might say, the banks and building societies ARE lending mortgages – they’ve got to as it’s a major source of income for them. The important thing here is not to listen to the newspapers or the people down the pub – check out the reality for yourself.

For this I’d recommend you speak to an Independent Financial Adviser who checks the whole of the market (i.e. not tied to any one lender) – they should be able to tell you how much you can borrow, and on what terms. With the interest rates at an all time low at the moment money has never been so cheap to borrow. People have moaned that the banks are no longer being so competitive over the rates they offer compared to the bank of England base rate, but the actual rate you’ll pay at the moment is generally the cheapest it’s ever been. For which IFA to choose (and more financial information) I’d recommend checking out Martin Lewis website www.moneysavingexpert.com – we’ve no affiliation to him at all but there’s good advice on the site.

After speaking to an IFA you should have a good idea of how much money you’d be able to borrow.

The amount you can borrow is normally linked to how much you’re earning, and how big a percentage of the purchase price you want to borrow – usually the better deals are saved for people who are borrowing now more than 75% of the purchase price. You can get mortgages up to 95% now – they might not be on such a good deal, but don’t forget this will probably still be a lot cheaper than it was 2 years ago – just because the Bank of England base rate is so low.

After you’ve done all this homework you should have a clear idea of what you can afford.

Step 2 – Do you really want to move house?
This might seem a daft question to ask but it’s important to give it some consideration at this stage. We have had clients who get up to the final stages and pull out because actually they didn’t really want to move. This causes headaches for everyone involved.

This used to be made worse because Estate Agents often used to run a ‘no sale no fee’ policy, partly with the aim of encouraging people to put their properties on the market which then encourages them to move when people start making offers! This really encouraged speculative sellers who are sort of swept up into selling their properties on the basis of “what do they have to lose?” However these are often the sort of people who would pull out at the last minute when they realise it’s not actually what they want.

This has all changed with the introduction of HIPs – Home Information Packs. It’s now the law that before you put your house on the market you have to have a HIP in place. HIPs generally cost between £300 and £500, and do not operate on a ‘no sale, no fee’ basis – you’re going to have to pay for the HIP even if you take your property off the market.

So if you’re selling you’ll have to put your hand in your pocket and pay for the HIP (there may be an option to pay over a period of time but sooner or later you’ll have to pay for it). The upside is that when you’re buying you’ll be buying off people who are serious about it (so less likely to pull out at later in the transaction), and also that they will have done a couple of the searches that you need to have done (the Local Authority and Water searches) – so you won’t have to pay for them again.

To help you decide if you want to move it might be an idea to look round and see what’s out there. This is a bit of a double-edged sword though – it’s sod’s law that if you look now you find the house of your dreams, and you can’t go ahead and buy it. Just looking around though might make you appreciate that there are a number of houses out there that would suit you – it can help you make that decision to move.

Step 3 – Sell Your House
So if you are serious about selling your house then the next thing to do would be to put it on the market. For this I would recommend using an Estate Agent. Estate Agents may not have a great public image, but in the UK I think they do provide a valuable service. I moved house in 2004, and the advice of my agent was really useful. I already knew what the house was worth but my agent advised I advertise it at a slightly lower price, stating that I wanted ‘offers over’ this amount. This created a bidding war which meant I got quite a bit more for the house than I was expecting. I would never have thought of this myself. This isn’t appropriate in some markets (the market’s nothing like 2004 at the moment so it’s probably not appropriate), but they should be able to give you good advice which could save you money.

The other thing is that British people tend not to be comfortable haggling – and this is another area where the Estate Agent comes in handy – as a go-between. If you’re buying though make sure you remember the Estate Agent is acting for the seller – not you. If you’re selling make sure your Agent is looking after you.

How to choose an Estate Agent? I would still say personal recommendation counts for a lot – try and speak to people who are selling and ask what sort of service they are getting. Also see who’s got a lot of boards up in your area – this could be an indication they’ve got a good name in the area.

Once you have the house on the market you’ll hopefully get viewings and offers on it. During this period it is a good idea to cautiously start looking to see where you want to move to. Again you can’t commit to any new house at this stage because you haven’t sold your own property. This is not unusual – most other people looking round will be in the same position. You may even find the house you want, and make an offer on it. Sometimes the seller will accept your offer – sometimes they’ll tell you to come back when you’ve sold your own. This is a fair thing to do because until you’ve sold your own house you really cannot go ahead with the new one (unless you get a ‘bridging loan’ which I would avoid like the plague).

I would recommend you instruct your solicitor on the sale at this point – before you’ve got a buyer. Your solicitor can then get a copy of the deeds ready, and get you to fill out property information forms so that when you do find a buyer you can move ahead quickly.

Eventually you’ll agree to sell your house. Again this should be to someone who is either a first time buyer or has a completed chain beneath them (i.e. everyone in the chain has definitely sold their property) – so none of them are still waiting to sell. A chain of transactions can only move at the pace of the slowest link in the chain – so if someone hasn’t sold yet then none of you can go ahead.

Step 4 – Look for a property to buy
So now you’ve sold your house – this is where things get exciting/stressful! If you’ve already found somewhere to buy you can now go to them and make a firm offer to them. You’re now in a stronger position, and may feel you want to negotiate more on the price (for example if you’ve dropped the price on your own to sell it, then you might want to recover this by reducing your offer on the one you’re buying).

If you haven’t found one yet then you need to get looking NOW! If you take too long to find one to buy then potentially your own buyer could pull out and go elsewhere (if it came down to this you could always move out into temporary accommodation and put your furniture into storage rather than lose the sale. This causes a lot of upheaval but at very slow times it can be a good idea).

The plus side is that now you’ve sold you are VERY attractive to people selling their house – this can allow you to negotiate harder on the price.

Once you’ve struck a deal then you should instruct your solicitor on the purchase as well. We’re then into conveyancing (I’ve put some beginners guides to conveyancing on the main website)

What’s the point of all this?
The hard thing about all this is tying everything together. You can find the house of your dreams, but not have sold your own; on the other hand you may sell yours really quickly but not be able to find somewhere else to buy. While you’re doing all this you’ll be meeting weird and wonderful people in all sorts of different situations who are moving for all sorts of different reasons.

If you do things in the order I’ve stated then I’m afraid it will probably still be a stressful experience, but it might be a bit less stressful than the alternatives. For example you find the house of your dreams and lose it because you haven’t even started to sell your own, or you can’t afford it because you haven’t done your sums, or you get way down the line and finally realise that what you really want is to stay where you are and buy a boat.

Reaction from others:-
Funnily enough when we last moved the thing that took me by surprise was the reaction of others. Telling people that you’re moving seemed to make people question whether they themselves should be moving, which in turn provoked some surprising reactions. A couple of people became quite defensive about the value we’d placed on our house saying it must be worth a lot more than that (translation= “if your house is only worth that much maybe mine isn’t worth as much as I thought”). Moving house is one of the great upheavals in life, and I can only assume that being presented with someone who’s going through it makes people question whether they should be thinking about it as well. Anyway, what do I know?

Hope this article is useful – please feel free to comment or ask questions below

Cheers

Mark

2 Responses to “Top tips for moving house – what to do and when to do it”

  1. How To Make Solar Panels says:

    It’s a shame more people don’t use solar panels

  2. Sladey says:

    Curious comment – but we have done a blog relating to taht as well – see it here http://fidler.co.uk/blogs/fidlers/2011/05/free-installations-of-solar-panels-the-legal-side.html

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