This week’s Loose Change comes from Vicky Eves who blogs about money and finance at ibeatdebt.com. It includes her getting into- and out of- debt story, as well as money-making side hustles and top tips for saving money.
I love a good spreadsheet. I might be a geek but I’m proud of it. Knowing this, a friend recently got in contact and wanted some help. Her partner and her were looking at moving and they weren’t sure that their figures were right. Off I went with my laptop in hand.
Spending time with them, helping them with their figures was really enjoyable – but also very eye opening. I know Brits on the whole don’t talk about money, so I felt privileged they were happy to let me share the experience with them. There are also a lot of things that people commonly forget about when they move and it was good to go through everything. I know of at least one person whose property sale fell through right at the last minute when the buyer realised they hadn’t budgeted for stamp duty! If you lost out on your dream home because you or your buyer did this, how gutted would you be?
Getting the ball rolling
My friends are looking at relocating for financial and work reasons. Part of the plan is to clear their mortgage. They called their bank and got a balance for the outstanding value of their mortgage. They were also reminded that as they were within a period of a fixed rate deal – there would be an early repayment fee. Would you have thought of this? This might apply even if you are moving and planning on taking your mortgage with you – can you definitely do that? Or would you need to pay off your current one and take out a new one? I would recommend speaking to an independent mortgage broker and they can help you find the best deal for you and your circumstances.
They got several estate agents in to give them a valuation on their property. With the birth of online estate agents you can save a small fortune on those fees alone. Make sure to read the Ts and Cs – some will charge you even if you don’t sell through them, and some won’t. There may be other fees and charges – so make you you do a like for like comparison. At the end of the day you should go with who you feel most comfortable with.
They then had a rough idea of what they could get for their property. This figure less the mortgage value is their equity in their home. If only it were that simple to say that figure was their budget for their new property! Unfortunately it isn’t though. That figure needs to take into consideration every cost they will incur as part of the move, unless they have another source of income or savings.
The most common figure buyers often forget about (according to local estate agents) is stamp duty. The rules on this changed a few years ago and on the whole, it is a lot more reasonable (unless you are buying a second home). It is a non-negotiable fee you have to pay on your new property, but it is paid at the time of purchase completion so you don’t have to find it early. You can calculate how much your stamp duty will be over at the gov.uk website.
For those living in leasehold properties – do you need to extend your lease? Unfortunately my friends do. They spoke to some neighbours and found out what they had paid a few years ago to do theirs. They based their figures on this value, but then found out the freeholders were going to charge them more as there was less remaining on the lease. If this happens, it might be getting some legal advice and possible even an independent surveyor to evaluate what the lease should be worth. This may mean you incur more legal fees, however you may save money in the long run. You should speak to your solicitor and estate agent about this.
Whether you have leases to extend or not, you will need to get a solicitor to do your conveyancing. Estate agents are usually only too happy to recommend a solicitor or their own in house service. Again, it is better to shop around. If you can, go with someone who is recommended to you by someone you trust. Ideally they should offer a flat fee so there are no nasty surprises at the end.
You will start having some viewings on your property. You may start to look at properties that you are interested in buying, however how soon you do that is up to you. You are in a much stronger position once your property is under offer (or if you are a first time buyer) but it can be a useful tool to see how far your budget will go. A possible downside of this is you see a property you fall in love with and as you are not under offer, you lose out. Saying this, you can lose out on any property at any time so again, do what feels right for you.
Once you’ve found the property that you want to buy, your solicitor will have to start doing a variety of local searches including title search and local amenity searches such as water and local planning permissions which might affect the property. Most solicitors will tell you about this cost upfront and can be included in their fees on completion. Some may require some payment upfront for these searches though – make sure to confirm this when you engage their services.
If you are buying a property with a mortgage, you will definitely need a survey, but it is highly recommended to get one anyway. This will cost you a bit of money, but it is well worth doing. You might choose to get one in addition to the one your mortgage company offer, as you might want a more detailed or more thorough set of checks.
You should get several quotes for a removal service. They will be able to quote you depending on where you are moving from and to, and the amount of furniture you have to take with you. You may even be able to haggle if you feel comfortable doing this. They should be able to advise if you need to dismantle anything before they arrive.
Unless you are downsizing, you will probably be moving to a larger property. Have you thought about furnishing it? Whilst you may have some furniture already, will the contents of a 2 bed flat fill a 5 bed house? You might not want to fill it straight away but near in mind there will be purchases you will want to make. You can easily get an estimate as to these costs by looking online and getting an idea as to what the items you will want to purchase will cost.
Once you’ve moved
You will almost certainly have a different budget once you have moved. Whatever your reasons (getting rid of the mortgage, getting a bigger place and a bigger mortgage) your monthly figures will change. If you are changing areas, will you be able to earn as much money? What is the council tax likely to be? This might change even if you are staying in the same area if your property size changes drastically.
Are you planning on clearing any outstanding debts as part of the move? Have you included this in your figures? Going forward your monthly outgoings will decrease if you have less debts, however if that is going to stretch you too far, you will need to make the decision as to whether it is worth it.
This list is not exhaustive, I’m sure there are lots of other fees and charges that other people will encounter when they move. I do hope however that it has given you some ideas about what costs you need to budget for. Ultimately you should do thorough research before you make any decision and get legal and financial advice for anything you are unsure of.
My favourite free resource for anything like this is the Money Advice Service – their range of information for people moving home can be found here.