Moving Home

Moving Home

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 judgment 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 adviser will be able to provide you with different figures depending on rate rises.
Potentially you could borrow anywhere between 3 - 5 times your salary (if you're buying as a couple it'll be more like 2.5 times your combined incomes).
Each lender is different and with over 12,000 different mortgages it pays to get the right advice.
The quickest way to discover the maximum you can comfortably borrow is by speaking to an experienced "whole of market" mortgage broker, such as ourselves, and getting them to check out all available mortgage deals, that way you can be sure you get the cheapest deal.