Your guide to selling and buying a new home
This guide breaks down each step of the process, providing clarity and actionable advice. As experienced mortgage brokers, we have your best interests at heart and aim to make the journey as smooth as possible.
Your current mortgage
Your first step is to understand the state of your current mortgage. Check your outstanding balance and consider any early repayment charges that may apply if you pay off the mortgage before the end of its fixed term. These can have a real impact on the equity available for your next home purchase. You may also be able to 'port' your existing rate over to the new property, more on that below.
Estimating your equity
Equity is the portion of your property you genuinely own. It's calculated by taking the current sale price of your property and subtracting the outstanding mortgage balance plus any selling and buying fees.
To estimate your potential equity after selling, you'll need to deduct the mortgage balance, any early repayment charges, estate agent fees, and solicitor costs for both the sale and purchase, as well as stamp duty on the new property.
Costs involved in selling your home
Selling a home isn't without its costs. These typically include:
- Estate agent fees (usually a percentage of the sale price)
- Solicitor fees for handling the legal aspects
- Lender fees, such as early repayment charges
- Stamp duty on the new property
- Removal costs
- Survey and lender fees on the new property
If you'd like us to run through all the potential moving costs, work out your equity, and assess how much you could borrow, give us a call.
Porting your current mortgage rate
Porting is the process of transferring your existing mortgage rate to a new property. It can be especially valuable if you have a competitive interest rate you'd like to keep.
However, not all mortgages are portable, and certain criteria must be met. You'll need to requalify for the mortgage on your new home by passing the lender's affordability tests, as well as their credit checks. If you need to top up the new mortgage, the additional borrowing will usually be at whatever rates the lender has available at the time of your application.
Planning your budget for the new purchase
Budgeting for a new home involves more than just the property's purchase price. You'll need to account for moving costs, renovations or repairs, home insurance, council tax, and potentially higher utility bills. Also think carefully about how comfortable you are with your projected monthly mortgage payments, given your current income and other commitments.
Working out how much you can borrow
Your borrowing capacity is the amount lenders are willing to lend you for your new home. Factors that affect this include your income, credit score, existing financial commitments, and the deposit you have available.
Lenders also look at your debt-to-income (DTI) ratio, which measures your total debt relative to your income. A lower DTI generally increases your borrowing capacity. We use software that runs your case through many lenders' affordability calculations, because the amount different lenders will offer can vary considerably.
Choosing the right estate agent
The right estate agent can make the process significantly easier. Look for agents with a strong track record in your area, positive customer reviews, and a clear communication style that suits you. Weigh up their fees against the value they offer, a good agent can often negotiate a higher selling price or a lower purchase price, more than making up for what you pay them.
The home buying process
Once you've sold your home and worked out your budget, the buying process begins in earnest: finding a property, making an offer, negotiating the deal, finalising your mortgage, and completing the purchase. Each step is complex and requires careful consideration, but a good mortgage broker will guide you through it and help you secure the best deal.
Applying for your new mortgage
The final step is applying for your new mortgage. This means finding the lender that will offer you the best terms based on your circumstances and requirements. We work with every UK lender and insurer, so we can find the best terms for your mortgage and any associated insurance products you may need.
Conclusion
Selling your home and buying a new one is an exciting but often complex journey. As you embark on it, remember that we're here to simplify the process, helping you understand each step and make the best decisions along the way.
Your home may be repossessed if you do not keep up repayments on your mortgage. You may have to pay an early repayment charge to your existing lender if you remortgage.