This month, our personal finance columnist, Mitch Hopkinson, looks at the main financial factors to take into consideration when moving house.
Mitch, a recipient of the ‘Financial Times Independent Financial Adviser of the Year Award’, is Head of East Midlands at deVere United Kingdom, the UK division of deVere Group, one of the world’s largest independent financial advisory organisations.
In today’s hectic world, everyone’s lifestyle can be different, there are many things that we choose to do that are seen as stressful, but with the right professional advice, moving house no longer needs to be one of them.Mitch Hopkinson
Spring is here, the clocks will soon be going forward and this is the time many of us will consider moving home. This may be due to an expectant mum, promotion, relocation, changing jobs or you may have just outgrown your current home and simply fancy a change.
When this happens there are a great many things to consider with regard to the financial aspects of moving home. It will help greatly to have a professional independent mortgage adviser to help and guide you through the process, which can often be a tricky one. So having someone at hand whom you can trust will make this whole process so much easier.
If you are moving up the property ladder, you may also need to increase the amount of your mortgage. You will need to ensure that it is affordable, so it’s crucial that you get the right advice upfront.
Choosing the right mortgage for your new home is essential. You may be able to transfer your existing mortgage to your new home and keep the same deal or it may be that a new mortgage deal is more suitable.
Whenever you apply for a mortgage, the lender will carry out rigorous checks into your finances, your income and expenditure, credit history and family circumstances. In the event that you are not able to transfer your mortgage, there may be an early repayment charge, so be careful and ensure you understand these upfront. It could be that these can be offset with a new lower cost mortgage, or it may be beneficial to wait a few months until the charge lapses.
Whatever your circumstances, it is important that you understand the many different features and benefits with your new mortgage. This is one of the areas an independent adviser can help. They should explain the different options available, and advise which is most appropriate for you. For example, with interest rates at historic lows, it could be a good time to fix in to a low long term fixed rate. But, these often come with hefty penalties if you pay the whole loan off during the fixed rate term. Conveniently, most lenders these days allow up to 10 per cent of the mortgage to be repaid each year no matter what the deal is, so be sure you understand all aspects of your new loan before you take it up.
Most mortgages these days will come with upfront costs. You need to budget for these, for example some lenders will charge a fee for the product you require. You will need to pay your adviser a fee to help you find the best deal for you. There will be legal costs and of course stamp duty to pay too on your new home if it is above £125,000.
You also need to factor in the cost of selling your own home and ensure that you net this off the proceeds available for the new home you plan to buy.
Finally, don’t forget that you will need to move house. There could be removal costs and you need to allow sufficient time to pack and then unpack. For most people the move from one house to another can be seamless. If you are not that fortunate, you will need to also factor in the extra cost of finding rented accommodation during the time you have to wait to move, or perhaps your other family might put you up for a week or too. But don’t overstay your welcome.
With a new home you will need to ensure that you have the right insurance and protection for you and your new home. Building and contents, accident, sickness and redundancy policies need to be reviewed to ensure that you have the right amount of cover.
Having the right protection in place gives you and your family peace of mind knowing that financial help will be available if you are no longer able to provide that security for either yourself or your family. In addition to covering any mortgage borrowing, you may also wish to make provisions for ongoing household expenses. So always ensure that this is factored in to your monthly budget.
deVere Mortgages advisers are qualified and experienced professional independent mortgage advisers. They will work with you to find the right solutions for you and ensure that they suit your new circumstances. They will guide you through this process from start to finish, they will handle all the paperwork and liaise with your lender, conveyancer and other professionals whilst providing regular updates every step of the way.
In today’s hectic world, everyone’s lifestyle can be different, there are many things that we choose to do that are seen as stressful, but with the right professional advice, moving house no longer needs to be one of them.
Mitch Hopkinson is a managing partner of deVere United Kingdom, part of the deVere Group, one of the world’s largest independent advisers of specialist global financial solutions to international, local mass affluent, and high-net-worth clients, through a network of 71 offices across the world and more than 1,000 staff. It has in excess of 80,000 clients and $10bn under advisement.