Steep moving costs, falling house prices and high mortgage rates are prompting some homemovers to reconsider their plans and focus on improving their current properties instead.
Stamp Duty bills alone can sometimes run into tens of thousands of pounds, and with mortgage costs having increased sharply over the past couple of years, improving your existing home might look an increasingly appealing option.
However, both moving and improving can involve massive upheaval, so it’s worth weighing up the pros and cons of each option carefully before deciding which is best for you. Here are some of the things you might want to think about.
If you’re thinking of putting a property up for sale, you can see which agents will do the best job of selling your home, based on past performance, using the GetAgent.co.uk website.
Moving home
With Stamp Duty, estate agent’s fees and legal costs to consider, moving is definitely not a cheap option.
You can easily spend £10,000-£20,000 or more in fees and charges – and that’s without the cost of getting the extra space. Plus, interest rates are high at the moment, which means mortgage costs are also steeper than they’ve been in recent years. If you have to move into a new area to get an extra bedroom or reception that could involve more expense if you end up in a pricier area.
That said, sometimes improving the property you’re living in now just isn’t an option, perhaps due to planning constraints, or because it’s already been extended or reconfigured as much as it can be.
If you do have to move, it’s worth considering the following:
Work out your budget
It’s not just how much you can afford to spend on your next property you’ll need to think about. Here are some of the other costs you should factor into your budget.
- If you’re buying property in England or Northern Ireland then you’re likely to have to pay Stamp Duty Land Tax on the property you’re moving to. Stamp Duty rates are tiered, so the more expensive the property you’re buying is, the more you’ll pay. Find out more about how Stamp Duty works in our guide Stamp duty explained.
- Unless you’re moving an existing mortgage across to your new home, mortgage fees will usually apply, such as an arrangement fee for setting up the mortgage. Even if you are porting your mortgage, you’ll still usually have to pay a mortgage valuation fee for the lender’s valuation of the property. Find out more in our article Moving house with a mortgage – what you need to know.
- Estate agent fees, if you’re selling your current home to move, will also add to your costs, with fees typically ranging from 1% up to 3% of the sale price. Read our article How to choose an estate agent to find out what to watch out for when picking an agent to sell your home.
- Conveyancing costs (sorting out the legal side of your property sale and purchase) can vary from a few hundred pounds to a few thousand depending on the value of the property you’re purchasing and how complicated the transaction is, so it’s worth getting a few quotes before proceeding.
- It’s a good idea to pay for a survey on your new home by a professional surveyor. The type of survey you will need will depend on the size, type and age of the property, and range from a basic Homebuyer survey to a more comprehensive buildings survey. Be prepared to budget anything from around £250 up to £1,000 depending on the type of survey you choose. Find out more about surveys in our guide Which property survey should I get?
- Your lender will require you to take out buildings insurance on your new home to cover it for damages from fires, floods and so on. You can find out more about home insurance in our article Your essential guide to home insurance.
- You’ll also need to factor in removal costs and getting all your possessions from your old home to your new property. Find out more in our guide How much does it cost to move house?
- You’ll also need to factor in removal costs and getting all your possessions from your old home to your new property. Find out more in our guide How much does it cost to move house?
Which type of mortgage should you choose?
If you’re not transferring an existing mortgage to your new home, you’ll need to choose a new mortgage.
Before you start comparing deals, you can narrow down the options available to you by deciding on the type of mortgage that suits your circumstances.
Before you start comparing deals, you can narrow down the options available to you by deciding on the type of mortgage that suits your circumstances. For example, if you’re concerned about interest rates rising further, you may want to consider a fixed rate mortgage, so that you’ll have peace of mind that your monthly mortgage payments won’t change during the fixed rate term. Alternatively, if you think interest rates could come down in the future, you may want to consider a tracker mortgage, where your rate moves in line with the base rate, plus a set percentage.
If you’re looking for expert mortgage advice, you can speak to an independent mortgage broker with Unbiased. Every advisor you find through Unbiased will be FCA-regulated, qualified and unconnected to product providers – so they can offer you truly unbiased advice.
Our article Different types of mortgages explained looks in more detail at the differences between fixed, tracker, discounted and other types of mortgage to help you decide which kind of mortgage might be right for you.
Find out more about mortgages in our guide Mortgages for over 50s: What you need to know.
Improving your current property
If you don’t want to spend thousands moving, the obvious answer might be to save whatever you would have spent trading up and put it towards reconfiguring your property or building an extension instead. Here are some of the things you’ll need to consider.
Do you need planning permission?
Unless you’re only making relatively minor changes (which may come under ‘permitted development’ rules) you’ll usually have to get planning permission to alter your property. Contact your local Planning Officer before you put in formal plans, as this will give you an idea of what to expect.
What will the impact be on your resale price?
While the main purpose of building on will be to get a better home for your own use, it’s worth keeping an eye on how any changes you make will affect the resale price. By adding space, for example, you will add value; but not necessarily as much as you think. If you over-develop, you may not get back more than the cost of the extension. Bear in mind too that house prices have started to fall, so any improvements you make – at least at the moment – might not boost the value of your home as much as you want them to.
The way to avoid over-developing your property is not to develop beyond the limit of most of the properties in your road – so if it is made up of three-bedroom houses, you may find it hard to get the top price for a four-bedroom house.
Think about the overall layout
If you end up with a house that’s been overdeveloped so that the layout doesn’t work anymore, it can be tricky to sell on. Likewise, if you build an extension or add a conservatory but end up with a handkerchief-sized garden, you may find that buyers, especially those with families, are not so keen.
Do you have a good builder?
Many people put off doing building work to their home because they worry about being ripped off. There are so many stories about cowboy builders that it is not surprising. The standard advice is to pick someone who has been recommended to you; and although it is normally the best option, it is not foolproof.
Do your own research as well: once you’ve found a builder, ask for references from three of their customers and ask if you can go and check out the work that’s been done to their properties.
Know your budget
Working out how much any building work will cost (and whether the quotes you are being given are reasonable or not) can be a challenge. Whatever the builders quote, you will have to add on professional fees (such as getting the plans drawn up). You can use an architect, but if it is a relatively simple project you could save money by using an architect’s technician.
Always get quotes from at least three firms of builders and ask them if they would do the extension in the way you are planning. They may have some useful suggestions and it’s far better for your costs that you stick to your plans once you have commissioned them.
How will you pay for your home improvements?
Once you’ve established your budget, you’ll need to think about how you’re going to cover the cost of your home improvements.
Options may include using savings, releasing equity from your property, taking out a loan or remortgaging to free up additional funds. All of these options have different pros and cons, which are examined in more detail in our guide How to pay for home improvements.
If you’re looking for expert mortgage advice, you can speak to an independent mortgage broker with Unbiased. Every advisor you find through Unbiased will be FCA-regulated, qualified and unconnected to product providers – so they can offer you truly unbiased advice.
Will you be able to live in your home while the improvements are being made?
You’ll need to think about whether you can stay in your home while building work is carried out. If you can’t, you’ll have to find an alternative place to live. If you don’t have friends or family you can stay with (given that building work can take several months) then remember to factor accommodation costs into your budget.
Finally…
There’s no right or wrong answer when it comes to whether moving or improving is best. The right decision for you will depend not only on what’s possible with your existing home, but also on the reasons you’re contemplating a move.
Often a move is not just about the property itself, but a change in lifestyle or location, which staying in your current home won’t help with. However, sitting down and crunching the numbers, as well as thinking about the logistics involved in each may make it easier for you to decide the best course of action for you based on your individual circumstances.
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