Homeowners
To work out your budget for your new property you first need to know what your total available funds are and then subtract the cost of moving home.
A good place to start is working out what you think your house will sell for and what do you still owe on your current mortgage? The first figure is easy enough to work out, just get three quotes from estate agents, and for the second speak to your current mortgage company to see what you owe. Having these figures allows you to work out the equity in your home.
An example of what this may look like is:
Equity Example
- Selling Price : £350,000
- Outstanding Mortgage: £250,000
- Equity: £100,000
Then you need to work out the cost of moving house, this is the cost of selling your property and what the cost of buying your new house will be.
The cost of moving can vary, with estate agency fees varying depending on the level of service you require - the majority of estate agency fees are between 1% - 1.5% of the property value plus VAT.
You will need to appoint solicitors to deal with the sale and purchase, however solicitors can offer a discounted rate upon you appointing them for both sale and purchase.
Other charges that may crop up are mortgage related such as lender fees, broker fees and valuation fees. In addition you may wish to leave some money aside for removals or even curtains in the new house.
Moving Cost Example
The remaining sum can be added to any savings or assets you have available for your new house 'equity' and can get used as a deposit for your new house.
Upon you getting all this information together we can assess your circumstances by looking at lenders affordability calculators and discuss what budget you will feel comfortable with.
Regardless of what a lender will lend you, it is important to consider the maximum mortgage payment you can comfortably afford. Remember, if interest rates start to increase, you need to ensure that you can still afford the monthly mortgage payments.
We appreciate this can seem very daunting, but don't worry Mortgage Light is here to help you every step of the way. We provide simple straightforward advice that is specific to your circumstances all designed to help make that next part of the journey as effortless as possible