Moving - how do you find out what you can afford?

We bought our current (first) house a few years ago for £245,000, it's a small terraced house with 3 small bedrooms. My husband is now saying maybe we should move closer to his work as traffic to work has been horrendous. Problem is that everything closer to his work is a lot more expensive and probably out of our price range. 

How can you find out what you can afford when buying a new home? I don't know what price range to look for. I recently remortgaged our current mortgage (£185,000 left over 28 years), new payments start next month. At the time it said our current house is worth around £335,000, but I imagine that may have dropped in the past few months. We currently have no real savings yet for a deposit. 

How do you know what you can afford? Prices have risen so much and the choice is limited. I'm worried we're going to end up with a worse house for even more money. 

Comments

  • You don't need to save for a deposit when you have around £150,000 equity (the estimated value £335,000 minus current mortgage of £185,000). Effectively you already have a £150,000 deposit.

    Here's how you find out what you can afford:
    1. Call a few estate agents and get them to value you current property. Take the average of these as a reasonable estimate of the sale price you can achieve.
    2. Call a mortgage broker and go over your income, expenditure, and credit history. They will advise how much they expect you will be able to borrow, and on what terms.

    There are other things to think about, such as whether you can port your mortgage. But if you do points 1 and 2, you will have a good idea of what you can afford.
  • Flugelhorn
    Flugelhorn Posts: 5,414
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    agree don't need to save for a deposit but remember to same for removals / fees / stamp duty / postal redirection / replacing furniture that won't fit / "getting stuff done at the new house etc"
  • Thank you for the advice.

    I think the estimate of £335,000 that FirstDirect gave us when we remortgaged recently was a very, very generous number. I think it will probably be closer to £280,000-£290,000 in the current climate. 

    One issue is that I am now self-employed and currently have only submitted one self-assessment (which was very low as I'd just started), with a second one coming up now. I imagine this is going to make things a lot more complicated - it's why I kept our mortgage with FD. I am not sure how it works to move house and remortgage when you are at the start of a 5-year fixed rate?  :s
  •  I am not sure how it works to move house and remortgage when you are at the start of a 5-year fixed rate?  :s
    It depends on the terms of the mortgage - hence why I mentioned porting. If you can port the mortgage that helps!
  • OP, I'd suggest looking at the area you are thinking of on the basis of your current mortgage and equity value. If you can find something, that's great. If not, you will have an idea of what extra mortgage you need. If you are near your affordability on mortgage, it will be difficult with just one year SA unless your husband is on a high salary. 

    Bear in mind, some areas are selling well, some aren't. Where I live (up north) , the estate agent has said that houses over £250k are struggling to sell at the minute (which is born out by the reductions in prices over the last few months), whereas houses sub £200k are selling quick. We are fortunate in that our house is sub £200k (going onto the market this week) but we are looking at houses over £300k that have seen reductions of up to £40k since the summer. 
  • OP, I'd suggest looking at the area you are thinking of on the basis of your current mortgage and equity value. If you can find something, that's great. If not, you will have an idea of what extra mortgage you need. If you are near your affordability on mortgage, it will be difficult with just one year SA unless your husband is on a high salary. 

    Bear in mind, some areas are selling well, some aren't. Where I live (up north) , the estate agent has said that houses over £250k are struggling to sell at the minute (which is born out by the reductions in prices over the last few months), whereas houses sub £200k are selling quick. We are fortunate in that our house is sub £200k (going onto the market this week) but we are looking at houses over £300k that have seen reductions of up to £40k since the summer. 
    Thank you.

    We are in the south, so prices are very high (for basically very little). From what I've seen so far, we would basically be downgrading our house and losing our big garden (which we were lucky to get) but paying at least £100,000 more than we paid for our current house. And moving even further away from useful things like a town centre, main train station etc. It's very frustrating, I've had a little cry about it already haha.

    Sadly, our incomes aren't very high either and I feel like we've pretty much reached what we can afford with our current mortgage (plus credit cards and car loan we're paying off). Which is why I think we might be stuck here for a while. 
  • gwynlas
    gwynlas Posts: 1,620
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    Perhaps your husband should look at jobs closer to home that pay what he is currently earniing or even a little bit less. Commuting in heavy traffic is stressful and can add hours to your time away from home but you must have chosen your current house for a good reason whether affordability or close to one of your workplaces. If you took on a larger debt then that what cause another form of stress. Look at the pros and cons for moving or staying put including the costs of sale and purchase access to child schools family and friends etc.
  • Agree, sounds like your like your house. I tend to think of my house in little boxes - bedrooms are just somewhere with a bed I sleep in. I don't need en-suites, walk in wardrobes and all that jazz. Living room is somewhere to sit and relax so I like a nice living room, kitchen is for cooking and we have a dining table in there, so that is important to me. The garden is somewhere to enjoy being outside, especially when grand kids visit, so I'd love a big garden. Being close to decent shops, train station etc. are a must for me as well. 

    Silva's comments above are worth exploring. If the real problem is your husbands commute, then he could try working on that. Pre-covid I went into the office every day, now i work at home every day. Work are happy with that, and so am I. We also have flexible working so I typically start at 7am and am finished by 3:30, so even when I was commuting I was setting off at 6:30 and there was little traffic. I can start any time from 7am until 10am, and finish any time up to 7pm. His work might not allow that, but it's worth exploring. I know a colleague of mine works at home for a couple of hours until rush hour has died down, then goes in - depends on your hubbies job.

    I certainly wouldn't want to pay more money for a lesser house with less local facilities, just for a job issue. 
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