We'll get you moving
Moving home is a big decision and there are many things you will need to think about. This guide is designed to help you on your way.
You will need to consider how much your existing home is worth. Many estate agents will offer a free estimate if you plan to sell your property through them. Once you have an idea of how much you can expect to receive when you sell your property you can determine how much equity you have. Equity is how much of the property you own and is the difference between how much you owe to your mortgage provider and how much your property is worth. So for example, if you have a mortgage of £100,000 and you sell your home for £150,000, you will have 'equity' of £50,000. When you move home you will use the equity you have as your deposit with any shortfall being made up from savings, depending upon how much your new home is worth. If your equity is more than is needed to cover your deposit then you can choose to keep some of the money back which can help if you need to make any improvements to your new home. Alternatively, you could put all of your equity into your new home and borrow less on your mortgage.
Our guide to selling your home provides some useful tips to consider when putting your house on the market.
Types of mortgage
There are many different types of mortgage.
Fixed mortgage: This is where the interest rate on your mortgage product is fixed for a set period and your monthly repayments will remain the same for the time you are on this product, even if the Standard Variable Rate (SVR) were to change.
Discount mortgage: This is when the interest rate charged is discounted from the SVR. Unlike a fixed rate mortgage, your monthly repayments and the interest rate can go up and down should the SVR change.
Tracker mortgage: A mortgage where the interest rate follows or 'tracks' another reference rate, usually the Bank of England’s Base Rate. So, if the reference rate were to change, the rate on your mortgage would match the change.
Offset mortgage: This is where your savings are used to offset interest on your mortgage. You will need to have your savings account with your mortgage lender and you will only be charged interest on the difference between your savings and your mortgage. For example, if you have a £100,000 mortgage and have savings with your lender of £20,000, you will only be charged interest on £80,000.
Variable mortgage: A mortgage where the interest rate can go up or down. The rate doesn’t follow another rate and is not discounted from another rate.
Fees and costs to consider
The expense of moving to a new home isn’t just the price of the property, there are also other costs to consider.
Booking fee: This is a fee for securing the money for your mortgage. The fee is non-refundable and must be paid when you apply.
Arrangement fee: This is charged to assess and process your mortgage application. You can choose to pay the fee upfront or add the fee to your mortgage. Be aware though, that if you add the fee to the mortgage amount, you will pay interest on the fee at the same rate as your mortgage. Fees can be for a fixed amount or calculated as a percentage of the amount you are borrowing.
Valuation fee: All lenders must assess the value of a mortgaged property by completing a mortgage valuation. This is to check the property is worth what you are paying for it and that they are happy to lend on the property. You can choose to have a standard valuation or a RICS Homebuyer’s report, which is normally more expensive but goes into more detail. The valuation fee amount will depend on the property value, our fees can be viewed on our mortgage valuation fees page.
More detailed structural surveys are also available. A structural survey will provide a full detailed report on the soundness of the structure of the property and you may want to consider this type of survey if the property you are purchasing is old or of a non-standard construction. In such cases your lender would still require a mortgage valuation to be completed for mortgage purposes so you may be liable for the cost of both the valuation and the survey.
Legal fees: You will need to appoint a solicitor or licensed conveyancer when buying your home. They will complete all the legal work for you. You should always get quotes first and check what work they will do for you.
Telegraphic transfer fee: This is a fee charged to transfer the mortgage funds to your solicitor.
Even once you’ve secured your mortgage and are ready to move, there will be other costs you will need to consider. As well as the everyday household bills you will be paying already, you are likely to have things to move from where you are currently living to your new home. Remember to get quotes and compare what is included to find the best deal for you.
Stamp Duty: This can be one of the biggest costs you will experience when you move home. It is a lump sum payment for buying a property over a certain value which you may have to pay. You can find more information on whether you will have to pay Stamp Duty and if so calculate how much it will cost on the Government's website. You will normally pay any Stamp Duty directly to your solicitor who will pass it onto the Stamp Office.
Insurance: There are many different types of insurance you should consider when taking out a mortgage. Although you do not have to buy them from your lender, you will need to have suitable policies in place. As a minimum, you must have buildings insurance cover and should also have consideration for contents cover and life insurance.
Removals: You will no doubt have things to move from where you are currently living meaning you may have to pay for a removal service. Always get quotes and compare what is included to find the best deal.
Council Tax: The amount of Council Tax you must pay depends on where you live and how much your property is worth. You can see how much you will have to pay on the Government website.
General upkeep: Things have a habit of going wrong from time to time so you may want to put some savings aside to repair any issues that come up.
Other bills: There are always costs of running your home. You will need to consider the cost of bills including water, gas and electricity as well as the extras, such as food, broadband and television. Remember, if your new home is larger than your current property then you're likely to find these costs will be more than you're used to paying.
Types of repayment
Repayment: This is where your monthly payment covers the monthly interest and also pays off an element of the mortgage amount outstanding each month. At the end of your mortgage term you will have paid off your mortgage.
Interest only: This is where your monthly payment only covers the interest charged on your mortgage. Payments do not reduce the mortgage amount meaning that at the end of the mortgage term you will still owe the full mortgage amount. In order to have an interest only mortgage you will need to have a suitable repayment vehicle in place to clear the mortgage balance.
Part and part: This is where your repayment type is a combination of repayment and interest only. At the end of your mortgage term you will have cleared some, but not all, of the mortgage meaning there will still be an outstanding balance. Again, you will need a suitable repayment vehicle for the interest only part of the mortgage.
Questions to ask
When you do find a home you will need to arrange a viewing. There are some important things to think about when looking at your potential new home:
- Is the property freehold or leasehold?
- Does the property look in good condition?
- Have there been any structural issues?
- Would you feel safe and secure in the property?
- Is there a working security system?
- What are the neighbours like?
- Does the property get much sunlight?
- How old is the boiler and has it been serviced regularly?
- What parking is available?
- What direction does the house face?
- Why are the current owners moving and when?
- Is there a chain? What impact would it have if the chain broke?
- How long has it been on the market?
- How good is the local public transport?
- What schools, shops and services are close by?
When you buy a home your lender will need to complete a valuation on it as part of your mortgage application. This is to ensure the property is worth the agreed price. A standard valuation will be completed as a minimum, however you can pay extra and have a RICS Homebuyer's report completed.
A standard valuation is a detailed report carried out, where the surveyor will determine the valuation of the property.
A RICS Homebuyer's report is more expensive but will go into more detail.
You may want to consider a structural survey, however your lender will not use this for their mortgage purposes which may result in extra costs for you.
Ready to buy? Where to start
Step 1: Work out how much you can borrow
First up, you will need to work out how much you can afford to borrow. Our affordability calculator will give you an idea of how much you could borrow from us.
Step 2: Talk to us
Once you are ready to start your home moving journey you will need to book an appointment with one of our Mortgage Advisers. In this initial discussion your Adviser will assess your affordability and confirm if we are able to lend to you. You will need to bring proof of any income and outgoings. To book an appointment you can call us on 0121 557 2551, visit one of our branches or complete our online form.
If we are able to lend to you we can provide you with a mortgage certificate which shows how much we may be able to lend to you, subject to full criteria checks. This can be shown to estate agents when you make an offer to prove you are serious about buying the property.
Step 3: Start looking for your new home
Once you have a mortgage certificate and know what budget you are working to, it is now time to start finding your new home.
Consider what area you would like to move to and what size property you need. Do you need to be close to transport links or are school catchment areas more important? It is important to think of every aspect of your day to day life to make sure you are looking in the right place.
There are many places you can look for property details:
- Local estate agents;
- Property websites such as Zoopla, Right Move or Prime Location;
- Property pages in the local newspapers;
- ‘For Sale’ boards in the area you are looking to move to; and
- Property auctions.
Step 4: Make an offer
Once you’ve found a property you like, you can make an offer. You can do this with certain conditions attached, however the seller does not have to accept these.
You will make your offer directly to the estate agent. If the seller rejects your offer you may be able to go back with an increased offer if you can afford to. If the seller accepts your offer it is a good idea to ask for this to be confirmed in writing and ask for the property to be taken off the market.
Step 5: Complete a full mortgage application
Now that your offer has been accepted, you will need to book an appointment to make a full mortgage application. Our dedicated Mortgage Advisers will be there to help make this process as easy as possible. You can complete an appointment over the phone or at one of our branches. Simply book your appointment by completing our online form, calling us on 0121 557 2551 or visiting one of our branches.
During your appointment your Adviser will provide a full advice and recommendation process, asking questions about your needs, circumstances and finances to allow them to complete a full assessment of your income and outgoings. They will use all of this information to recommend a mortgage suitable for you.
Remember to bring:
- Your last three months’ payslips or SA302’s and Tax Year Overviews if you’re self-employed;
- Proof of any other income;
- Your last three months bank statements;
- Proof of your identity and address;
- Evidence of your deposit; and
- Full details of any outgoings.
Step 6: Appoint your legal representatives
You will need someone to deal with the legal side of buying your home. When choosing a solicitor or licensed conveyancer make sure you ask for a full breakdown of their costs, how often they’ll keep you updated and that they’ll be available when you need them.
Step 7: Property valuation
When you buy a home we will need to complete a valuation on it as part of your mortgage application, this is to ensure the property is worth the purchase price. We will complete a standard valuation as a minimum, however you can pay extra and have a RICS Homebuyer's report completed which will provide more detail than a standard valuation. You can also consider a full structural survey, however this would be at your own cost in addition to any valuation fee charged with your application.
Step 8: Your Mortgage Offer
Once we have assessed your mortgage application, a valuation has been completed and all underwriting checks have been passed we will issue you with a formal Mortgage Offer. When you and your solicitor are happy with everything outlined in the Offer you will be ready to exchange contracts.
Step 9: Exchange of contracts and set a completion date
You will now need to exchange contracts with the seller of the property. Until this is done both you and the seller are free to walk away from the sale. Once you have both signed the contracts, you are legally committed to complete the transaction. You will also need to arrange a completion date with the seller at this point. If you are in a chain you will also need to liaise with the buyers of your home.
Step 10: Insurance
You will need to arrange buildings insurance before you move into your new home. Although we require buildings insurance to be in place as a condition of your Mortgage Offer, we don't insist that this is taken with us.
Step 11: You’ve completed, now move in
This is the day when your solicitor arranges for the money to be transferred and the estate agent hands over the keys to your new home, congratulations!