When you're thinking of selling your existing property and moving to a new home, it's important that you try and budget accurately. The more accurately you can estimate this figure, the better.
How Much You Can Spend On a New House?
To enable you to work out this, you first need to know what your total available funds are and then subtract the cost of moving home. Start by putting some simple figures down on paper, such as:
●Savings or assets you have available (not relating to your existing house)
●The maximum mortgage payment you can comfortably afford
●Then you need to work out the cost of moving house:
●What selling your property will cost
(estate agents typically charge between 1%-1.5% of the property value)
●What buying your new house will cost
(mortgage fees charged by the lender, solicitors costs, removal lorries, etc)
Once you've worked out the costs for each of the categories above, you can start looking at how much money you will have available from the sale of your existing property. So,
●What do you think your house will sell for?
●What do you still owe on your current mortgage?
The first figure is easy enough to work, get at least three quotes from estate agents. Next, finding out what you still owe on your current mortgage is simply a matter of calling and asking your lender directly.
Traditional financial wisdom recommends your monthly mortgage payments are no more than a third of your monthly net income (i.e. what you take home after tax). We don't want to sound patronising but we can't stress enough how important it is not to overstretch yourself.
Once you've had a mortgage and proved you can make repayments, lenders become minded to offer ever-increasing sums....
Don't expect lenders to lend responsibly. It's up to you to make a judgement call as to the risk.
Remember, if interest rates start to increase, you need to ensure that you can still afford the monthly mortgage payments.
An Independent Mortgage Broker will be able to help you identify what you can afford to borrow. Potentially you could borrow anywhere between 3 - 5 times your salary as a maximum threshold before a lender applies their affordability model to your unique situation. (if you're buying as a couple you could still reach 5 times your combined incomes). Each lender will offer a different combination of Interest Rate, Fee's and maximum advance based on your how they view your affordability. Each Lender has its own way of accessing affordability which can lead to a lot of confusion over how much it is possible to borrow.
The quickest way to discover the maximum you can comfortably borrow is by speaking to an experienced Independent mortgage broker, such as ourselves. To discuss your requirements call us on 0800 3893796 or 01483 419288. Alternatively request a call from us by completing our contact form.
A MORTGAGE IS A LOAN SECURED AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
First impressions count for so much - many properties have been bought before the prospective purchaser has even set foot inside the property.
So take a little bit of time - and treat your home as if you were seeing it for the first time again.
What do you want your conveyancers to be able to offer you?
It is really important that you select the right Removal Company for your needs.
How many people will still have keys to your new property? 2? 3? 4? 5?