Making your next move on the property ladder can be daunting, but proper planning can help you navigate this process smoothly
While taking that initial step on to the property ladder can seem like the biggest milestone in the home-buying journey, moving on from your first home into your next property can be no less daunting. We take a look at the key considerations for next-time buyers.
Choosing a home
The fundamental consideration is budget, affordability and the amount you can borrow. Taking the time to discuss your options with your mortgage provider or financial advisers will help you gain a proper picture of what you can afford.
The other main influencing factor is the size of your family and your plans for growing your brood. It’s important to prioritise practical needs – if you’re planning a larger family, the number of bedrooms is obviously a key factor. Creating a checklist of priorities for potential locations is also helpful: consider the facilities, shopping and leisure options, quality of life and proximity to commuter transport links and school catchment areas.
Evaluate your skills and utilise them. If you like DIY, you could renovate a property to get more space for your money. If DIY makes you nervous, look for a finished home with as many features you need as possible.
How is the process different to buying a first home?
First, you can be in a chain, so the actions of others might affect the buying and selling process. The number of links in the chain will dictate how quickly you move and if there could be any delays.
Second, you have to market your existing home, which will be under scrutiny by potential buyers.
“There’s plenty of preparation next-steppers can take to get ahead,” says Rachel Johnston of Stacks Property Search.
“If speed of transaction is vital to you, get a survey done and tackle any urgent and visible repairs before going to market. It’s also useful to get costings for remedial work to provide a yardstick for any negotiations.
“Pay to have searches done on your property to offset problems down the line,” Johnston advises. “If the searches throw up local development or possible planning issues, you can allay fears by providing context early for potential buyers.”
You needn’t redecorate the whole property – the new owners will almost certainly want to change decoration to suit their own style – but decluttering, cleaning thoroughly (especially the kitchen and bathroom) and tidying the garden to maximise kerb appeal are all worthwhile steps.
Getting an accurate valuation is also vital. “And that can be daunting as second-time buyers are usually first-time sellers,” says Nathalie Hirst, a London-based buying agent.
Best practice is to use an agent with a good reputation who knows the area well and may already have a list of prospective buyers.
“If the valuation is merely to tempt the seller into going with the estate agent, and isn’t accurate, this hinders any onward purchase,” adds Hirst.
Two other factors influence your borrowing power: a rise in household income and overpayments on your existing mortgage to reduce your mortgage debt. This lowers your LTV ratio even further, opening up cheaper mortgage deals, saving you even more money.
Other moving costs you must budget for include stamp duty, a Land Registry, surveying costs, conveyancing fees, an energy performance certificate (EPC), removals and potentially mortgage product fees.
Don’t forget the paperwork
When you apply for your mortgage, you’ll need documents showing your income and expenditure.
Moving involves lots of paperwork, so it’s important to complete this accurately and promptly to help avoid delays.
Your document checklist might include:
title deeds – most Land Registry records are digital but you should receive a physical copy
solicitor’s report on title
new home policy/warranty documents
confirmation of stamp duty payment (referred to in Scotland as land and buildings transaction tax and in Wales as land transaction tax)
house purchase documents from your seller
guarantees – for new appliances or FENSA (double-glazing) certificates
boiler servicing records
building control certificates
building survey results
Check your credit report for errors and correct any before applying for a new mortgage and moving home, or it could affect your application.
Moving home offers the opportunity to reassess your mortgage deal.
Often the most hassle-free option is to transfer your existing mortgage to your new property. This usually means staying with your existing lender and borrowing more money as you move up the property ladder.
“If you’re on a fixed rate, you can usually keep your existing rate and apply it to your new mortgage for your new property,” says Chris O’Brien, product development manager at the bank. “Although, please note this is time-dependent, so you will need to discuss it with your lender.”
“If you need more than your previous mortgage, you can usually take a new rate for the difference, but bear in mind this is subject to status and being approved for new borrowing.”