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Guide to Buying and Selling your Home

Moving home is as exciting as it is stressful for homeowners. On the one hand, you get inspired on the hunt for a home, then there is the legal processes and possible delays in the buying chain, bringing your right back down-to-earth again.

This guide is designed to help homeowners prepare and navigate the buying and selling process.

Step One -Deciding to Sell

The first thing you must do is examine your financial situation carefully, can you afford to move now and what are you looking for in a new property? Extra rooms? A quieter area in the countryside or a bustling new city, with more employment prospects?

It is at this point that you may want to reconsider and improve your home, rather than move on. For example, if you need an extra bedroom, would it be more cost-effective to convert your attic into a bedroom instead?

Once you have these answers, and have decided that you still want to move, approach your current mortgage lender, and inform them that you are looking to relocate.

Many mortgages available today are ‘portable,’ this means that your outstanding mortgage balance can be transferred, to help you pay for the new property. However, you will need to check if this is a feature of your current mortgage plan. Porting your mortgage means that you will continue to pay the same rates, but with some loans, you may have to be re-assessed according to their current lending criteria, so the lender can ensure that you are not in negative equity or your plan to move won’t hinder your ability to keep up with your mortgage repayments.

Our Guide to Improving your Credit Rating, can help you prepare for this re-assessment, offering tips on how you can boost your credit score and hopefully gain access to a more favourable mortgage deal.

Please note: Porting your mortgage may still incur fees, as your lender will need to valuate your new home, to agree the property’s value.

What if I Need to Increase my Mortgage Loan?

If your decision to move means that you will need to increase your mortgage loan, it is very likely that you will need to pay for the new application. It is at this point that you may wish to seek financial advice from an independent mortgage broker, or research the rates available to you, as there may be a better deal elsewhere (especially if you have built up significant equity in your current property). Doing this can incur exit fees for your current mortgage, as well as the costs associated with taking out a new mortgage deal.

See our Guide to Applying for your First Mortgage, for a breakdown of mortgage application costs.

Step Two – Selling your Home

The next step is to look at your home in its current state and determine its value. Browsing similar home prices in your area is a good start, as you will want to give yourself 5-10% leeway in offer negotiations, once you have accepted an offer.

It is at this stage that you should consider any cosmetic changes, repairs, or improvements, to make your home an attractive property to potential buyers. Enhancing things like ‘curb appeal’, redecorating to a neutral cream or white scheme and removing clutter are things all buyers should consider before putting their house on the market.

When you are selling your home, you are selling a ‘dream’ to buyers. They want to imagine their stuff in your home. So, if your house/flat, in its current state, is falling into disrepair, or filled with mounds of clutter, some buyers don’t have the imagination to look past these flaws. They will just move along to the next property, where perhaps it might look like there is less ‘work’ to do in terms of clean-up and maintenance. Your aim is to broaden your property’s appeal to the maximum number of buyers.

Once your property is in a sellable condition, it’s time to approach some estate agents for a home valuation. You can, of course, choose to sell your own home online, although to get an idea of the asking price, you will need to conduct research on the market in your area, as you don’t want to set your price too high (and put off viewers) or too low (and struggle to cover the costs of moving).

Estate agents will typically charge a fee of around 1-3% of your sale price +VAT. This is to cover their costs which includes, advertising, valuation, and viewings etc... It is possible to negotiate these costs with some agents and it is not always wise to go with the agent that gives you the highest home valuation, as this may hinder potential sales, meaning you will be stuck in your current home for longer.

Please note: It is also possible to find estate agents that charge a flat fee (for example, £2,000), but it is not always best to go with the agent charging the cheapest fees. The reputation of the agent (i.e. the number of sales they have completed of property types like yours, is an important factor to consider, as an experienced agent will get you the best offer).

What are the Costs of Selling a Home?

As well as estate agent fees, sellers will also have to cover the costs of the following, in putting their homes on the market;

• Energy Performance Certificate – This document rates your home’s energy efficiency and gives it a grade of A to G (with ‘A’ being the most efficient). Your agent can put you in touch with a provider and the assessment will typically cost from £50-£100 to conduct.
• Conveyancer/Solicitor Fees – These fees will depend on your choice of legal representative, as their costs for handling the legal aspects of home selling can range from £500- £2,000.
• Removals/Storage – Unless you can arrange these things yourself, you may have to pay for a removal company or storage hire to handle your belongings in the move.

Step Three – The House Hunt

Once you have agreed a sales price for your own home and the advertisements are running, it’s time to start your own house hunt.

Our Guide to Buying your First Home has more on the things you should consider in buying your next home. In brief, you will want to consider the home’s condition, appearance, location and what it could be worth if you were to renovate and sell it in a few years’ time.

Another key factor of the house hunt is what you’re getting for your money, for example, is the property leasehold or freehold?

• Leasehold – This is where you own the property (flat or maisonette) within the building for the length of its lease. When considering a leasehold, you will need to know how many years are left on its current lease. You may need to pay to extend this lease and you ideally want 30 years left on it, after you have completed your own mortgage term. With leaseholds, you may have to pay the owner (freeholder) fees to service and maintain the building. If this is the case, find out their charges and re-assess from there.
• Freehold – This is where you pay for the property and the land, most UK houses are freehold.

Once you have found a house you want to put an offer on, you will need to pay for a home valuation survey. There are two types, which are appropriate for different scenarios, for example;

• Home Buyer’s Report – These are appropriate for new builds and modern(ish) buildings. This is a general inspection of the condition of the property and will highlight any works that need to be done. These reports can cost a few hundred pounds to conduct.
• Full Structural Survey – These are highly recommended with listed, unusually designed properties, that may have been built over half a century ago. This survey costs around £1,000 to conduct but offers vital information on the building’s condition. If the results of either survey option say that the home needs work, you should try and reflect this in your offer, as you will have the proof in black and white that work needs doing.

Step Four – Accepting an Offer

Hopefully, you won’t have to wait too long until the offers on your home start coming in. Be careful not to accept an offer that’s too low because you want a quick sale. You can turn these offers down and still leave the channel open for them to possibly come back with a higher offer, so stay firm, but on friendly terms at all times.

Once you have accepted a written offer from your buyer, you (the seller) will need to start the legal work. At this stage, it’s important to note that the sale is not official yet. Things can go wrong right up until the exchange of contracts and completion stages. Two things that could happen include;

Gazumping – This occurs when a buyer accepts an offer on a property with a verbal agreement, only to have another buyer place a higher offer, which is then accepted instead.

Gazundering – This is where a seller accepts a lower offer for a property. A lower offer can be agreed before the sale is completed and typically occurs when the housing market is weak or the seller is keen to move quickly.

As mentioned in stage one, you will need to approach your current lender with your plans to sell and agree to either port your mortgage from one house to the next or agree a new mortgage in principle.

Let’s Look at a Mortgage Porting Example;

Peter took out a mortgage on his £200,000 flat two years ago. He has a 30-year mortgage plan with a 10-year fixed period, capped at 1.5% interest. He sees this as a great deal, however two years down the line, he is in a happy relationship with his partner and they want to get their own, bigger, place together. Peter has shopped around for an equivalent new deal and has found a mortgage which charges 3% interest.

Peter reapplies to his lender to port his mortgage and increase the amount borrowed to £240,000. As Peter has changed jobs since he took out the first mortgage and earns significantly more now, he was permitted to port his mortgage and borrow an additional £40,000.

Please note: Porting your mortgage is essentially reapplying for the same deal on a new property. If you do not get accepted for a new mortgage in principle, after a credit or affordability check, speak to an independent mortgage broker, who may be able to help you find a new mortgage. Take a look at our Guide to Applying for a Mortgage with Band Credit, for more tips.  

Step Five – The Legal Work

Once an offer has been accepted, a mortgage in principle agreed and your solicitor/conveyancer has been instructed to process the sale, there may still be delays and hindrances in the buying/ selling process.

Here are some scenarios that may cause delays in a property sale;

• Property Deeds – The seller’s legal representatives must obtain the property deeds. If the property is a leasehold, this may take longer as the ‘memorandum and articles of association’ must be received from the building management company, detailing their accounts from the last three years.
• Local Authority Search – As mentioned in previous guides, the buyer must pay for council searches of the area, checking for scheduled works on the facilities of the area (i.e. sewers, roads etc.) This can take up to eight weeks to arrange, further delaying the completion of a property sale.
• Problems in the Chain – If, for example, the person who is selling the home to you has a problem with their buyer (they may drop out, for example) then this is known as a ‘problem in the chain.’ Not all house sales go through successfully, this stage is often the most stressful for home movers, as some of the problems are simply out of their control.

Stage Six – Exchange and Completion

When the legal work is ready, you will be given a date for exchange of contracts (transfer of home ownership) and completion. On the day of contract exchange a 10% deposit will be placed on the home and both parties (seller and buyer) are committed to the sale. This means that as a buyer, if you pull out, you will lose that 10% deposit. Also, if the seller gets a higher offer at this point, the buyer can get their 10% back as compensation.

If you are putting down a larger deposit to your mortgage lender, this would be the stage where the funds are transferred. Further, you may need to arrange contents, building and life insurance arranged, to protect your investment. The time between exchange of contracts and sale completion is usually around four weeks. Once completion date has come around, your house sale is complete and you get the keys to your new home.

The process of buying and selling your home can be convoluted, but worth it. An independent mortgage advisor can help you get your funds in order and find the best mortgage deal for you as a home mover. Get in touch today for a free, no-obligation mortgage quote.