Need to move out but can’t afford it? Here’s 7 options
Moving home can be pretty expensive. There are the costs of preparing your property for sale or the costs of buying the property including mortgage fees, legals, surveyors and a removal company to move your belongings from A to B. There are then the costs of finding a new home, along with paying stamp duty.
The good news is that stamp duty in England, Northern Ireland, and Wales has just been substantially reduced. In England and Northern Ireland you can now buy a property up to £250,000 without paying any stamp duty (unless it’s a second home) and in Wales, you can now purchase a property for up to and including £225,000. For those paying more, you can save a full £2,500 off your stamp duty bill (in England/Northern Ireland).
If you are a first time buyer you have the added bonus of purchasing a property for up to £425,000 without paying stamp duty in England, while in Scotland you can purchase properties free of Land and Buildings Transaction Tax up to £175,000.
What to do if you can’t afford to move out?
If you don’t think you could afford to move even with the recent changes to stamp duty/land tax, there are ways in which you could still move, you don’t necessarily even need to buy or sell.
The first of these is ‘let-to-let’. This is where you let your own home and then rent somewhere else. It’s a great way to decide what to do in the long term if you will struggle financially to know what to do initially and your moving situation is uncertain. At least by letting your own home and renting somewhere else, when things are more certain or finances have improved, you may be able to move back into your original home, or sell it and move on.
However, letting or renting a home can have its issues – including the tricky task of making sure you let and rent a property which is legal and safe to live in. Read our in-depth article on ‘let-to-let’ to work out if this is the best way for you to move for your personal circumstances. [link to new let-to-let article]
Another way of being able to afford a home if you are finding it difficult to secure anything within your budget is to turn to auctions. At our sister company First for Auctions, all of the auctions are held online. Although it’s important to view a property in person and make sure you have all the legal information, you won’t have to turn up at an auction house to bid as it is all done online.
If you do decide to buy at auction though, you need to be extremely well prepared as once the hammer goes down, if your offer is accepted, you will have committed to exchange on the property and will lose your deposit, typically, if you don’t complete within four weeks. Ideally you will need cash at the ready, or you will have to have arranged specialist auction finance and you will incur costs for legal work and the survey whether you manage to secure the property or not. However, it’s possible to secure a great property at a bargain price using this method.
It may be that you own a property outright at the moment, but when you move you might find it difficult to sell the existing property and then purchase the next one with cash. If this is the case, you may be able to secure a mortgage to help you through this time and you might be surprised to know that although in the past there have been age restrictions on mortgages, these are now far less common. Most lenders are happy for you to borrow money up to 65 or 70 years, but some will even lend to you in your late 70s and even at 80. They will require you to meet certain criteria though. Our sister company Mortgage Scout can offer advice with a no-obligation consultation.
Buy with a relative or friend
Another way to afford to move is by clubbing together with a friend or family member. This is particularly useful in very expensive parts of the country such as London. When you combine two people’s savings for a purchase or rental deposit it can be really helpful, as can sharing the bills during the cost of living crisis. However, you do need to make sure you have an agreement on what happens to the property if you fall out, or one of you needs to move on.
Finally there are Government schemes you can consider. These aren’t just for first time buyers, some, such as shared ownership are available to those who have retired and want to afford a home of their own, but would struggle in the local market. This scheme allows you to buy a percentage of the property, such as 25% or 50% and you can ‘staircase’ your ownership upwards by buying more shares in the future. You will have to pay rent on the rest of the property, but it’s 100% yours and it’s worth considering, especially if you need to stay in a particular area for a reason, such as being near work or family.
In addition to schemes such as shared ownership there are others, including ‘Deposit Unlock’, which is a joint initiative from new build developers and lenders. This allows you to purchase a property with a 5% deposit, taking out a 95% loan to value mortgage. So if the property is worth £250,000 you would only need a £12,500 deposit. Although this isn’t a ‘discounted deal’, the reason this is offered by lenders is the developers protect the lender if you default and they have to sell the property for less money than they originally lent.
First Homes – First Time Buyer Affordability
Another scheme is called ‘First Homes’ where a local authority works with developers to sell a property for 30% or more off its market value. This means your deposit is lower and you need less money to be able to afford the property. Unlike similar schemes such as Help to Buy, the big difference with this scheme is the property will always be sold at the same discount to help retain affordable homes in a local area into the future. However, this is quite new, so there are only a few homes available, but it’s worth asking Scott Fraser if any of these schemes are planned for the area.
If you aren’t sure what the next steps are to take and would like some expert help, we advise people on a daily basis on the best way to put the right roof over their heads at the right cost. We’d love to help you move and secure a new life in your next home, so do come and talk to us either in our offices, via email or call and we’d be happy to help.
Looking for advice?
If you're looking to let or sell your property, we can help. Get in touch with your local branch or book in for a property valuation.