As a first time buyer, you’ll find that there’s lots of information around about taking your first foray into the housing market, but what about when you’re ready to take those next steps up the property ladder?
There are a number of reasons for wanting to move on from your first property – you may be relocating to a new area for work, perhaps you’ve started a family and have simply outgrown your current home or you’ve spotted your dream home for sale and want to grab the opportunity . So what exactly do you need to know before taking the next steps up the property ladder?
Use your experience
In many ways, you have an advantage over first-time buyers because you’ve been through the home buying process, so it shouldn’t be quite as daunting as it was the first time round. You know what you are doing, and the basics of purchasing a new home aren’t too much different from that of a first-time buyer. You’ll be aware of expenses such as basic home maintenance, home insurance and other costs involved with running a home, but there are other financial aspects you’ll need to be aware of as a second-stepper.
Although you’ve previously bought a property, this will likely be the first time that you’ve had to sell a property. Before you put your home up for sale, you’ll need to have your home valued. Estate agents usually offer free valuations of your home – you’ll only pay fees once you’ve chosen an agent to go with, and your home is sold.
When it comes to a deposit for your new home, how much you’ll need will depend on two factors. The purchase price of your new home and how much your current home sells for.
The more equity you have in your current home, the bigger your deposit is likely to be. If your first home has gone up in value since you bought it, you may be pleasantly surprised with the amount of equity you have. Alternatively if you want to make sure you have more equity in your home when it comes to moving, you may wish to make overpayments on your mortgage.
Your age could also have an impact on your finances. If you are moving home in your 40s or 50s, bear in mind that you are unlikely to a mortgage of more than approx. 20 years so your payments may be more expensive to allow for this.
In the property chain
As a homeowner you have a property that you need to sell before you can move, and likewise the people that are wanting to buy your property may need to sell their home too. We call this the property chain. The amount of links in the chain may affect the speed of the process.
Unfortunately, with a number of different parties involved things can go wrong in the chain. If the worst happens this could cause your move to fall through so make sure you are prepared in case things do go wrong. Unfortunately moving up the property ladder can be a slow process, but hopefully if everybody in the chain keeps up their side of the bargain, everything will go smoothly.
Getting your mortgage right
If you want to move it’s important to have your finances in order. If you already own a property, then chances are that you have a mortgage, but you may need to borrow more in order to buy your dream home so you’ll want to find the best possible rate. There are a number of different mortgages available for those wanting to move up the property ladder so make sure you look into what’s available to make sure you are getting yourself the best deal.
Although you may feel confident with the buying process having previously been through it, there is no harm in seeking advice from an independent mortgage adviser. They can help you to work out which mortgage will be the best one for your circumstances and can help you to understand your financial situation in regards to your equity/deposit etc.
The above post does not constitute advice – financial, legal or otherwise. The information within this article is the author’s own opinion and do not necessarily reflect the views of SO Media or So Smart Money.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.