Affording my second home

TBagpuss

In terms of your original question, things like your survey and searches have to be paid upfront, so you would need to have enough to cover those costs. Moving - I think most movers require at least a deposit in advance and the balance on moving day, so again you would need to have access to funds for that.

Solicitors fees and estate agents costs would usually be taken out of your sale proceeds on completion day, so you don't have to have those saved in advance but it will mean you have less money available for your new property.

you'll also need to budget for those costs, and for stamp duty etc, whatever the mechanics are for actually paying them.

As you say that you can afford higher mortgage payments, I'd suggest that you get a rough idea of what you could afford in mortgage payments and start putting the diference aside (i.e. if you currently pay £700 a month but think you could get, and afford, a mortgage where the repayments are £1,000 a month, start putting £300 a month into savings.
This has a double benefit. First, you can get used to living on the lower net income you'll have after moving, and Second, you'll start to build up some savings to cover the costs of a move.

As others have said, 18 months is a very short period to own a house for, it's worth thinking about why you want to move so fast, and whether it is in your best interests to do so. (potential buyers may raise questions about why you are moving on so quickly)

As CycleMonkey says, sit down and work out a budget - cost of the new property + stamp duty + removal costs + costs of purchase (legal fees, searches etc ) + costs of sale (estate agents, legal fees etc) + contingencies .

Do a second budget looking at your likely outgoings if you do move - not just the higher mortgage but also any other changes, things like higher council tax sand bills if you move to a bigger property, and so on.

if you are still confident that you can afford it and that it is practical for you, then go ahead.

Do bear in mind that sold prices are a much more reliable indicator of value than asking prices, and that a good deal of what you have done sounds as though it was / will be cosmetic, so will have little impact on the value of the house, although it may make it easier to sell.


In your place, i would focus on doing work to the house which would make it a pleasanter place to live in for you and your wife, so you enjoy it as your home. Save the money that you can - either by overpaying your mortgage or by putting it into a savings account or ISA, and consider moving when you have some savings available and and a bit of surplus for unexpected additional costs.

Niv

wirralmatt wrote: »

Thanks for the advice and comments.

I am talking about selling my first home and moving to a second home. Not buying an additional home. Sorry for the lack of clarity.

Because the house we bought was being sold by a couple who were divorcing, and because it was in a horrible state (so bad that the estate agent had no photos of the inside and only two of the outside), we got it for a really great price (Asking price was £110,000, we paid £100,000). We haven't had it valued yet - that's next on the list if we can work out how to make the cashflow work for the fees and stuff.

In terms of adding value, from the prices of identical houses in my street I believe that we have added about 20% (£20,000) to the value of the house, against what we paid. We have completed a full rewire, redecorated throughout, replaced the bathroom, and redone the garden.

Before we look to sell we will also be making improvements to the front of the property including modernising the porch, relaying the driveway, repainting the front of the house, and some basic landscaping.

We have addressed everything that came up on the original survey, with the exception of some wear and tear on the kitchen cupboards and some sections of laminate flooring.

Thanks

Matt

So, let me get this right. You think the house is now worth 120k?


How much did the refurb cost?


How much were your buying costs?


How much are your selling costs? (EA + solicitor)


How much are removal costs?


Put on Market for 120k it will probably sell for less (I would expect 115 – 118).
All the 'added value' you talk about is pretty much gone in your costs.


If your reason for moving is to ‘flip it’, don’t bother.

wirralmatt

@TBagPuss Thank you for such clear advice and for addressing my questions.

wirralmatt

Niv wrote: »

So, let me get this right. You think the house is now worth 120k?


How much did the refurb cost?


How much were your buying costs?


How much are your selling costs? (EA + solicitor)


How much are removal costs?


Put on Market for 120k it will probably sell for less (I would expect 115 – 118).
All the 'added value' you talk about is pretty much gone in your costs.


If your reason for moving is to ‘flip it’, don’t bother.

Thanks for the comment. This is not about making any money out of it, this is simply about taking the next step on the ladder to the dream house. I don't care if we make a profit on it - this is about working towards the ideal home.

PasturesNew

Re deposit for the new house - you don't need to have this available, in cash. Just make sure your solicitor knows you don't have that cash sitting around and it'll come from the sale of your current house. There will then only be a "theoretical/mythical deposit" at exchange, when you're liable to pay the deposit if (say) something went wrong and you pulled out .... but you don't need to actually have the money available.

Solicitors do it all the time, else few people would be able to move.

At exchange you "hand over the deposit" - but you won't. You will simply be committing to that much money and will "owe" it. Your solicitor needs to know this, but it isn't something unusual at all.