Upsizing House Mortgage

What costs are involved when upsizing? 

Stamp duty is the really big one. it works in a couple of ways depending on whether you are buying and selling, or renting your first property out. 

For example, if you live in a one bedroom flat in London and want to hold onto it as a rental, you’ll be charged an additional 3% stamp duty on the new property.  Even though it’s not a Buy to Let, it’s a second property. If you’re named on more than one property at the point of completion then you’re charged that surplus. 

Do be aware of that. Use a good online stamp duty calculator to understand how much that will be before you start. 

If you’re selling your property, you’ll need to pay estate agency fees. They do widely vary. There are online-only agencies offering a fixed fee of like £500, or up to 3.5% of your sale price with an agent. It’s all about finding the right agent for the area – there’s no one rule. Online might be a good solution in bigger towns and cities. 

Outside of that, you’ve obviously got moving costs. Take time to find a reliable firm. I had a nightmare with our movers – they smashed some of our things, so getting the wrong firm can be expensive. 

Then you’ve got legal fees and survey fees. Survey fees are fairly nominal and legal fees can range from a few hundred pounds to a few thousand pounds. I recommend you go with a good solicitor and that means paying for it – now more than ever. Conveyancing firms can be a bit of a sausage factory. They are lower cost but can be quite a poor experience. These firms run on skinny margins, so look at Google reviews or get recommendations from estate agents or friends and family. 

It’s important because if you can’t get the legal work done in time everything might go out the window. Most upsizing stories revolve around children, school term dates and catchment areas – so don’t risk it. Get a good team so you’re where you need to be at the right time.

What are some of the advantages and disadvantages of upsizing?

The big advantage is that you’re achieving a specific goal. It means you can get your child in the right school, or gain more space, or you can live near a beach. It can also be an investment opportunity as well. You could hold on to existing property if your income and deposit allows. It will give you a Buy to Let in reverse. 

The main downside is that upsizing is an expensive process, with stamp duty, legal costs and selling fees. Plus you’ll be taking on a bigger mortgage when you’ve got children, school fees and other things to contend with. It’s a wonderful but scary time. 

I’ve just gone through all this – my children have just finished nursery and I’ve now got the big house in the country. So I’m through the other side. We can talk you through and support you through the process. It’ll be quite scary but the rewards are there. 

From personal experience, we’re now in a nice part of Surrey with a fantastic school. We know our neighbours and even moved down from London with one of them. I’m over the moon with what we did, even though the process was quite stressful.

What else do we need to consider?

I just want to pin it down some more detail around affordability. Think about what’s changed since you last took out a mortgage – you might have a really strong income, but if you’ve got a second property, children in fee-paying schools or nursery etc, that will be taken into account. 

The affordability is really important to get right. Don’t just talk to your bank because they don’t all calculate things in the same way. Some banks ignore certain things, others don’t. It’s our job to put you with the right bank for the right outcome. 

Structure is also really important. You might put a proportion of the loan on interest-only and can mix that with a repayment mortgage. It comes back to budgets and affordability, but it can be a good way to keep costs down for a period of time. That’s no bad thing as long as there’s a viable way of paying back the interest-only element. You might have bonuses or other assets, or you might refinance later. 

Lastly, most importantly, brokers have access to exclusive deals. We get preferential treatment from banks and lower rates that you just won’t get on the high street. Another  Covid shakeout is that around 90% of all mortgages are going through brokers now. So 

deal with a really good broker because we can make a real difference. 

You’ll have all sorts of things going on and your time is very valuable – so let us worry about this and make the whole process go as smoothly as we can.

Your home may be repossessed if you do not keep up with your mortgage repayments.