The Home Mover Guide
Ever wanted a step-by-step home mover mortgage guide?
Well, The Mortgage Centre’s moving house guide is just that. Written by experts, this guide will help you navigate the experience from start to finish.
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Our guide to moving house covers many topics, helping you to break down the process. It gives an overview of the various aspects:
- Property valuation
- Stamp duty
- Legal and other fees involved
- Calculating what you can borrow
- Choosing the right mortgage
- Increasing your chances of success
- Bad credit
- How to do your own research
What to expect when buying or selling a property
Start at the beginning – deposits and valuing your property
The process of selling a property to move to a new one is often described as one of life’s more stressful experiences. But, it doesn’t have to be.
For many homeowners, most of their money is locked up in their existing property. The difference between the value of the property and the amount owed is known as equity.
The equity is what normally forms your future deposit. A first-time buyer will need a pot of cash to pay for fees and provide a deposit. Whereas a homeowner could use the equity from the sale of their property.
You can speak to an estate agent to value your existing property. Most agents will do this initial valuation free of charge. So it’s a good to have valuations carried out by a few different agents for comparison. That way you can ask the fee each agent will charge to market the property, so you can budget for it.
What costs are involved with moving?
Stamp Duty
Unlike for first-time buyers, stamp duty becomes payable as soon as the purchase price of a property exceeds £125,000. The percentage of stamp duty paid increases as the property value increases.
If you’re buying a second property, there will be an additional charge at the relevant rates at that time.
Our stamp duty calculator is quick and easy to use and provides an instant figure for the amount you’ll pay.
Legal Fees
When getting a mortgage for moving house there are lots of legalities involved in the process of both buying and selling. They will need to be taken care of by a professional, typically referred to as a conveyancer.
Land Registry Fees
There are certain fees involved with registering a property in your name. These fees are paid to various parties, including your local authority.
Other Fees
Depending on your situation, you may need to pay for several other services. This can include a mortgage valuation/surveyor and/or a mortgage advisor.
Calculating what you can borrow
Calculating the costs you are likely to incur will help you know what you will have available for a new deposit.
The amount borrowed in relation to the value of the property is known as the ‘Loan to Value’ (LTV). The lower the LTV percentage is, the better the interest rates available from lenders.
Try our mortgage affordability calculator to get an idea of what you could borrow.
Choosing the right mortgage
The world of mortgage products can get complicated. We’ve outlined some of the most common types as simply as we can. But, by far the best way to understand it all is by speaking with someone who knows the market.
At the most basic level, there are two decisions you need to make when deciding on how you intend to arrange a mortgage. The option you choose will be specific to your own personal situation.
Repayment or interest only?
Repayment
- Each month your payment pays off both the loan and the interest
- One reason to do it: Monthly payments reduce your overall loan amount
- One reason not to: Payments are higher
Interest only
- Each month your payment pays off the interest only and no capital
- One reason to do it: Payments are lower
- One reason not to: Monthly payments only service the debt/interest
Fixed or variable?
Fixed
- Your interest rate is fixed for the duration of the fixed rate scheme.
- One reason to do it: you are protected against future interest rate rises, which can save you money.
- One reason not to: having this security can be more expensive if interest rates were to drop.
Variable
- Your interest rate will fluctuate based on the market.
- One reason to do it: you can make the most of interest rate falls.
- One reason not to: you are not protected against interest rate rises which can be costly.
Our tips for home movers
There are many ways you can try to make the process of getting a mortgage a little easier. Here are some suggestions.
Pay your bills
Late or missed payments can affect your credit rating, in turn, impacting your mortgage options. Stay on top of them or they could cause you problems.
Do your personal admin
With so many bills now paperless, it’s easy to forget to change your address or other details. This could affect your mortgage chances, so make sure everything’s up to date.
Don't shop around too much
Every time you make a mortgage application, or even use a comparison website, you may be subject to a credit check and too many of these could reduce your eligibility.
Manage your credit
The funny thing about credit is that it can be easier to get it if you already have it. For this reason, it’s sometimes good practice to spend a little amount each month on a credit card.
This shows you can borrow money and repay it. Use it to pay for your travel each month, or fuel for your car, something easy you can pay back without hassle. Remember to pay at the very least the minimum payment each month on time.
Forget about payday loans
Although advertised as a way to help you, this form of credit can do the exact opposite when applying for mortgages. Lenders see them as an indication of cash flow problems even if they are maintained and paid on time.
Documents needed to apply for a mortgage
This will vary between lenders, but you can expect this to be your last three payslips if you are employed (possibly more if you wish to include regular non-guaranteed sources of income such as overtime, commission, etc.) together with your last three months’ bank statements.
Outgoings will need to include any regular payments you make. Don’t forget to include debts like credit cards and loans. You’ll also need to provide proof of ID and address.
Self-employed requirements can vary considerably from one lender to the next. So, it’s always worthwhile making sure you are covered for any eventuality.
If you’re self-employed or own 25% or more of the business you’ll probably need to provide your last two years’ tax return summaries (SA302s). Furthermore, on occasion, you may need your last two full years’ business accounts.
This will vary between lenders, but you can expect this to be your last three payslips if you are employed (possibly more if you wish to include regular non-guaranteed sources of income such as overtime, commission, etc.) together with your last three months’ bank statements.
Outgoings will need to include any regular payments you make. Don’t forget to include debts like credit cards and loans. You’ll also need to provide proof of ID and address.
Self-employed requirements can vary considerably from one lender to the next. So, it’s always worthwhile making sure you are covered for any eventuality.
If you’re self-employed or own 25% or more of the business you’ll probably need to provide your last two years’ tax return summaries (SA302s). Furthermore, on occasion, you may need your last two full years’ business accounts.
Diving into the mortgage market can seem like a daunting prospect. However, with a little research and advice, you can familiarise yourself with the landscape.
- Family and friends
Advice from someone you trust who has had first-hand experience is extremely valuable. However, bear in mind that it’s likely their situation was very different to yours and may not be up to date.
- The internet
Yes, there is an abundance of information online and yes, some of it is very useful (like this guide). But, there’s a lots of it that isn’t, so tread carefully and don’t believe everything you read!
- Lenders
They are the ones lending the money but remember that they can only discuss their own products and criteria. Remember to always speak to more than one to get the broader view.
- Mortgage brokers
With experience and a wider access to lenders, consulting a professional is by far the best option. Why not give us a call today to find out how we can help.
The amount borrowed in relation to the value of the property is known as the ‘Loan to Value’ (LTV). The lower the LTV percentage is, the better the interest rates available from lenders.
Any savings you have to cover fees or supplement the deposit will help to keep the mortgage amount down. Many lenders will allow additional funds such as family gifts to be used for this purpose, too.
When a lender assesses you for a mortgage, they will consider a multitude of things, including:
- Your income
- Your outgoings
- The size of your deposit
- How much debt you have
- Your credit history
It’s impossible to predict exactly how much you can borrow as no situation is the same and each lender has their own specific criteria. But most lenders have an online affordability calculator to give you a rough idea.
Don’t take this figure as final because it could change when a more detailed assessment is made.
At The Mortgage Centres, we’ll take all your individual factors into consideration and tell you exactly how much you can borrow.
It is possible to include additional income in your calculations such as benefits or maintenance, for example, but this all depends on the lender’s own specific rules. We also have a guide to mortgage affordability.
If you are a buyer with bad credit, don’t worry, there are still options available. However, it may not be straightforward.
Lenders will take into consideration all the hard facts, whether it’s something relatively minor like a missed credit card payment or something more serious like a County Court Judgment (CCJ).
However, they will also take into consideration how long ago these blemishes appeared and will look in detail at your overall financial conduct to see whether your behaviour has changed.
So, if you’ve had some problems in the past, but you’re doing your best to put them right, it will be noted and may make a difference.
Phil Scott
Director
About the author
Phil has worked in the financial services industry since 1992, having started with a large insurance company. He went self employed in 1996 as an Independent Financial Adviser before setting up his first company, Needham Market Home Financial in 1999.
After four years, he decided to concentrate solely on mortgages and related insurances, and The Mortgage Centres was born. Since then, Phil has been influential in the opening of several new offices as the business continues to grow.
Qualifications
Financial Planning Certificate: 1,2 & 3
Year Attained: 1992
Certificate in Mortgage Advice and Practice (CEMAP)
Year Attained: 2001
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