Moving home with limited savings - are we being naive??

kixxb

My partner and I have lived in our current property (or first home) for around 6 years.

We love our house but don't really like the area we live in and have chatted about moving in the past but never really done anything to prepare.


We've now decided that we want to move and have found our dream home in a lovely area but due to our lack of planning and savings we are not in the best position financially.


Although we have no debt other than our mortgage and 12 months left on my car, we have never been savers - we've been spenders and although not living the life or riley have had a very carefree attitude to managing our money which has now come back to bite us in the bum!


We are now on a strict saving drive aiming to save up as much as we can in the next 5 months to help cover the 5% deposit we need for the property (it's a new build, won't be ready until Dec/Jan so we are planning on taking advantage of the NewBuy scheme).


In theory, we should have enough equity in our current property but the way the markets are and the fact that no one with our house type in our street has sold in the 6 years we have lived there makes it hard to predict what we can sell our property for.


We have invested money in the property with a new bathroom and double glazing very recently but I'm not sure we would get much uplift in the value of the property.


We both earn good money - about £81k per annum in total.


Our starting point is £2k savings and a pretty realistic plan to save an additional £1000 per month which should just about give us enough for the deposit assuming we make nothing from selling our property. We do have other savings via employee sharesave schemes but if we cash these in now, we'll have to pay tax so we'd prefer to leave these alone but we should have another £9k maturing in the next few years.


Are we being naive that this is possible? We do have family who would be willing to help us if required and I think there is room to negotiate with the builders as they have been developing the new estate since 2005 and need phase 2 to be completed before they can start phase 3 which I think might give us some leverage?


Any thoughts/comments welcome - including those that might sadly bring me back to earth with a bump!!

georgehere

Well done for taking those first steps and the difficult job of getting saving.

Sounds like it would be useful to get 2 or 3 local estate agents in to give you a better idea of the selling price for your house - to give you a better idea of your budget.

I can't claim to be any sort of expert but the big items I would take into consideration are:
1)Proceeds from your sale minus agents commission
2)minus what you owe on the current mortgage
3)minus Solicitors costs, maybe £1,500
4)minus Moving costs, maybe £1,000
5)minus Stamp Duty on the new place
6)minus a bit put aside for when you move in ... curtains and so on

With those accounted for, you'll know what you have left to pay for the new house and that means you can see if the mortgage you will need is one you can afford and if the mortage is not big enough or affordable, then you can use the Forums here to give you ideas on how to save more to boost your deposit.

Exciting times by the sound of it ... good luck with your plans.

Thrugelmir

Have you costed the move fully?

Until you've sold your property then you have no leverage with the developers.

kixxb

Thanks for the responses!!

We are still running through the full costs of the move - we'll have a clearer idea of estate agent costs by the end of this week hopefully.


georgehere - thanks for that breakdown.


Point a & b - as above, that will remain unknown until we select an estate agent and sell our property,.


Solicitors costs - we've factored in about £3k for this which will obviously need to be covered by our savings.


Moving costs - that's another unknown but we wouldn't be using a removals company and would do this ourselves but I imagine there are other costs that I'm not thinking of right now!


Stamp duty - that's hopefully going to be something else we consider as part of the negotiation!


And yes, we need money left afterwards to cover the cost of any additional furnishing which, to be honest, could be covered by credit cards and paid back pretty quickly if needed!

Yorkie1

I'd be very wary of entering into any irrevocable agreement with the developers unless I knew that my house sale was secure (or as secure as they get ... )

Thrugelmir

kixxb wrote: »

Stamp duty - that's hopefully going to be something else we consider as part of the negotiation!

With a 5% deposit. Unlikely there's much room.

The developer will pick up the cost of the guarantee. That'll amount to several thousand pounds at the level you are intending to purchase at.

kixxb

Thanks for clarifying! We absolutely will not enter into any formal agreement until our house is sold.

We are fortunate that the final dates/plans for the development aren't completed yet and the earliest the property would be available is January - that's if we secure a plot in the first phase - we could wait to the next phase which won't kick off until next year.


We aren't in a desperate rush to move but really want to move to this area - hopefully the situation with the builders/development will give us the time we need to sell our property and also save up as much as we can.


I have a friend who is a property builder and she has emphasised that builders are often keen to get out of the estates and have the houses all sold as soon as possible which given they have held onto this land since 2004 hopefully puts us in a strong position.


I'm going to be quite cheeky and ask for a 95% mortgage plus part exchange value for my property that will give us about £5k in equity - the answer will most likely be no but if you don't ask....


Thanks for all the useful advice! This whole process has really highlighted how stupid we have been with our savings strategy!