Craig Skelton Principal of CS Mortgage Solutions & CS Retirement Solutions talks to Natalia Thompson about moving home.
So Natalie, we’ve spoken before about the benefits of using a mortgage broker but today we’re going to have a chat about moving home?
Yes that’s right, I wanted to talk about home moving in general rather than the mortgage side of things and a bit about the current situation, as things have changed quite a bit recently with the incentives introduced around Covid-19
I guess people don’t move very often do they, so things must change over time. Is that fair to say?
Yes the market changes all the time and with the recent changes introduced as a result of the Covid-19 pandemic, like the Stamp Duty holiday for example, this means a lot of people are thinking about moving at the moment. Some people, those who are living in their first house for example, will never have moved before so it’s useful to think about the process and it’s certainly worth talking to a broker because the products available and what’s involved is changing all the time.
What are the main reasons people think about moving in the first place?
The two main reasons are generally upsizing, when people are thinking about having more children and needing more space for that and downsizing, when you are looking for a smaller property when the children have grown up and moved out. Looking to move to an area with the best schools is another good reason why people move and unfortunately, there is also the scenario where people are splitting which means that one or both of them have to look for new properties.
Work commitments can also mean people have to think about finding a new home, people can get fed up with their commute or maybe they find a new job in a different area. Family ties as well can affect where people live, they may want to be closer to their parents as they get older or they might be Grandparents who want to be closer to their Grandchildren. In short people either move because they have to or simply want to.
What’s the first thing I should do if I wake up in the morning and decide I want to move?
I would say the very first thing you should do is to dig out your most recent mortgage statement and speak to a broker to find out what your options are. The temptation for most people is to head over to Rightmove and start booking viewings but my advice would be to hold off on that and speak to a Mortgage Broker first. Moving house can be super, super stressful and if you speak to a broker straightaway you will get all the latest information about what products are available in the current market and they can remind you of the process too.
A broker will be able to tell you how much you are going to be able to borrow and calculate the cost of moving for you as well as giving you an idea of the minimum price you might get for your own home and how much discount you might be able to negotiate. Once you’ve got all that information you can then look at Rightmove and start to search for properties that are actually in your price range when you know how much you can really spend.
You might find that, after talking things through with a broker you don’t want to move at all and you would rather raise some capital to stay where you are and improve your current property with a loft conversion or an extension, so you’ve saved yourself a lot of time and trouble in getting an estate agent involved, when all you really wanted to do was stay where you were and have a bit more room.
Looking for the new home is the exciting bit though isn’t it?
Yes, looking for the perfect new home is certainly the most exciting bit, which is a bit weird really when you think about it because moving house is one of the most stressful things you can do! If you think about it, moving home is a bit of a double edged sword. On the one hand you’ve got all the fun and excitement of finding your shiny new home but then you’ve also got all the stress that comes with it, so anything you can do to reduce that stress will help.
So you would definitely say it’s worth finding out what your options are first of all?
Yes definitely, I know it doesn’t sound very exciting, but dig out your mortgage statement and go to see your broker or bank straightaway. Find out what your mortgage balance is and what the likely repayments would be on a new loan, then you really can start to look for properties that you know you can afford right from the start.
Is there a difference between seeing a broker or bank?
The main difference would be that the bank will only be able to talk about the particular products they can offer you and you could end up feeling disappointed because you can’t borrow as much as you thought you might be able to, as they would be working with only their own lending criteria. On the other hand, if you go to chat with a broker then they will be able to offer a choice from all of the available lenders and the difference, in terms of the amount you can borrow, can be tens of thousands of pounds. That’s not to say you shouldn’t speak to your bank as well, because you definitely should, but a broker is going to check a whole range of products for you. Bear in mind that even across the products available from the top ten High St banks there can be a big difference in how much they are prepared to lend.
Should I have an end goal in mind from the initial meeting?
You would certainly want to find how the maximum amount you can borrow and talk about any fees that might be payable to get out of your existing arrangement or whether it might be best to stay with your existing lender. Then you can start to talk about how much you can afford to repay so you know what the monthly cost will be of your new property, which in turn means you will know exactly what price range you can look at for your new home. Then you can start to get excited about viewing!
Would I then need to get an Agreement in Principle at that stage?
It all depends on how the conversation goes and at what stage you are at but you could even come out of that first meeting with an Agreement in Principle, you’d certainly be looking to get one quite soon after.
Why would I need to get an Agreement in Principle?
Really because it means you are serious about your house move, you can put your own house on the market and it says that you are in a position to proceed once you find a house you like. Agreements in Principle normally last 90 days so you’ve got 3 months to find your new house and when you do, you can put your offer in straightaway.
Do some people do all this the wrong way around?
Yes, if you are in a position where you are viewing and want to put an offer forward the estate agent is going to ask for an Agreement in Principle anyway as they would want to be sure that you can actually get a mortgage on the property you are interested in.
Is it easy to get an agreement in principle?
Things can crop up, which might mean it is more difficult to get an Agreement in Principle in place than you might think, so if you get one sorted out before you start viewing you’ve got the peace of mind that you can proceed from a financial point of view and are ready to go.
It’s not good if you have found the house that you want and you’ve then got to start discussing things with your bank or your broker. If you get an agreement in place before you start then you’ve not got any of that time pressure.
Do people realise how important the Agreement in Principle is?
We get so many calls where people are saying they want to make an offer and need an Agreement in Principle as they want to get the house they are buying taken off the market. This is fine, but as we said before, it’s a stressful process and one way to avoid that stress is to be prepared right from the start so if you have already sat down and discussed things with a broker and have the Agreement in place then you are forearmed and ready to go.
What about my existing home? What do I need to do to get that on the market?
I think the best thing to do is to get three valuations. It’s not a good idea to jump in with the first estate agent you think of because it’s probably been a while since you last moved and the market might have changed, so get three valuations from different agents to get a good range of opinions.
The next thing to do is to declutter because you don’t want to show your house with too much stuff in it. People want to see what the potential is with their own possessions in the house, they’re not too bothered about seeing yours!
Also I would try to de-personalise the place a little bit so put the family photos away maybe! People like to be able to imagine themselves living in your house and if you have too much personal stuff around this is difficult to do.
Finish off any DIY jobs you’ve got too. It can be quite off-putting to buyers if there are obvious things that need doing. One blown window pane might draw their attention to all of the windows and it might be that it is only the one that needs replacing so again, you’ll save yourself a lot of stress if you tidy these things up first. If you got any missing roof tiles, get up there and get them sorted!
This can be the start of the process of moving anyway, so start clearing out the stuff you are not going to take to your new home before you even start having people around to view, because that’s going to free up loads of space and make you feel better about the place.
What should I look for in an Estate Agent?
When choosing an estate agent it is important to look for someone who is proactive in the market and has a good market share. It is not just a case of who offers the lowest fees or will put it on the market for the highest amount. You are tasking them with selling your home.
Understand for yourself how much your home is worth. You can look through online resources such as Rightmove or Zoopla to see what things of similar size are selling for and what is available on the market. If you understand the value of your home and compare this to the remainder of your mortgage repayment you will get an understanding of the equity in your property, this will assist you to then get a decision in principle which will assist you in searching for your next property.
I’ve heard people talk about being “Mortgage Ready” What does that mean?
It means tidying everything up to the point where you are managing your finances in the best way possible, getting your credit report in good standing, making sure you have your deposit ready, that kind of thing. Also, I wouldn’t be rushing to sign up to any new loans or credit commitments in the weeks leading up to getting a new mortgage either as these could affect your standing. If you need any advice on these points, again I would advise talking to your mortgage broker.
Another thing that people sometimes stumble over is having a valid I.D. because you will need that to get an Estate Agent to take a property off the market for you once you’ve made an offer and for the mortgage side of things, so make sure your Driving Licence or your Passport is up to date. You’re also going to need things like payslips and bank account statements and it’s worth checking that you are on the Electoral Roll at your current property too.
Is there anything I shouldn’t be doing?
As I said you definitely shouldn’t be making any new commitments that might affect your credit but you also want to make sure you’re not doing anything like getting a credit search done for a new mobile phone. Just like late payments on your credit card bills and store cards, credit searches can affect your ability to get a mortgage, so my advice is to always keep that side of things in order otherwise one day it will affect your ability to borrow.
What about affordability?
It’s easy to get excited about your new home and how much you can borrow to make this a reality but you do also have to be realistic and think about whether you can actually afford the repayments as no-one else is going to pay your mortgage for you. That’s one of the good things about using a mortgage broker because they will do a budget plan with you at the outset to make sure that the new house fits in with your lifestyle. You don’t want to be having to change your lifestyle to be able to afford the house and that’s something lenders will consider too, they will take into account the essential costs of living and that’s something you can discuss with your broker.
What about the costs involved in moving, what do I have to think about?
There is a bit more to consider than when you are buying for the first time. You will have to pay solicitors fees for both the buying and selling side of the process and you will have estate agent’s costs to pay too. If you’re using a broker there might be fees to pay that will have been discussed with you at the outset and of course you will have to budget for the removals themselves whether you are using a professional firm or doing them yourself.
Stamp Duty is another cost to consider and the amount you pay will depend on the purchase price of the house, but again this is something your broker will have spoken about at the outset.
How do you help your customers?
I like to work with them and help them from the very beginning so I can help them to find a suitable property, help them with a valuation, organise viewings, and negotiate a price because I can help save client’s money on the cost of the house as well as the mortgage itself.
If you are dealing with house purchases every day it does give you the confidence to put in a cheeky offer on behalf of customers and that’s something I’m more than happy to do and I’d certainly advise people to take advantage of all the services a broker can offer. As we have said, the whole process can be very stressful and you can’t avoid that altogether so if there is help you can get, my advice would be to take it.
What about chains, do I need to think about them?
Where you are in a chain is definitely worth considering and you want to make sure that the Estate Agents involved are doing all they can to help keep things moving. There will be a lot of Solicitors involved too so keeping on top of them and chasing them is important as well.
Is there anything else a broker can do to help?
When you think about it, a Mortgage Broker is helping lots of different people with their house purchase and will know a lot of people who are in a proceedable position, so it’s quite possible that they will be able to put you in touch with someone who is in a great position to buy your home. If you’re working with an agent that’s great but don’t forget that your mortgage broker will often be able to introduce you to potential buyers, which is something else to consider.
Finally, how would you sum up the process Natalie?
First of all you need to understand how much you can borrow and how much your current home is worth, which you can do by talking to your existing lender or broker and your estate agent. Once you have done this then you can get an Agreement in Principle in place.
Then you need to consider affordability and the cost of your new home both in terms of the actual purchase price and the costs involved in moving like estate agents and solicitors fees, stamp duty and removal costs.
Don’t forget you need to have a tidy up, with your finances as well as your house itself and remember to not get yourself involved with any new credit commitments, but most of all, try to avoid as much stress as you can be taking advantage of the help that is available.