How to finance the move

Calculate the Price of your New Home

The maximum price of your new home will be calculated from:

A: The selling price of your old home + any savings or capital you can raise + the mortgage loan you can afford to repay,

Minus

B: The balance you still have to pay on your old house + moving expenses as detailed above + any redecoration or refurnishing costs needed

The result is how much you can afford to offer for your new property. Go above this and you might face difficulties in your repayments. Now you have to finance the new mortgage loan using the steps above. However, you might have more difficulties as outlined below.

Bridging loans

If you are buying and selling at the same time, you might not have all of the initial finance above, under paragraph A.

Specifically, you might need a bridging loan to complete the purchase before you have sold your old home.

A vendor might not be prepared to wait until you have all of your funds available, and that is what a bridging loan is designed to cater for. It is a short-term loan to make up the difference between the mortgage and your deposit that will come from the sale of your previous property. The loan might be taken for anything from a week or two to several months, and you might even need it for the 10% deposit. This is a situation that lenders are familiar with, and you should not find it difficult for them to provide this finance that will be secured on the house that is up for sale. Your solicitor will give you advice on the difference between open and closed bridging loans.

The Valuation

You will require a valuation of your new property to make sure that it is worth the amount that you intend paying. This report will provide you with the market value of the property, but will not include a structural survey: this should be carried out separately, and it might be worth while having both done at once to save money.

Structural Reports

A structural report will highlight any faults in the structure of the property, such as any settlement, subsidence, foundation problems, and so on.

Not all structural faults are over-expensive to rectify, and you could negotiate a reduction in the price if the structural report is negative. Before doing so, get an estimate for the repairs needed: you will frequently get that with the report.

Stamp Duty

Stamp Duty is a government tax on purchasing a new property.

However, there are cases in which it is not chargeable, including for first-time buyers and new homes that are occupied by the buyer and the floor area is less than 125 square metres.

Mortgage Interest Relief

Mortgage interest payments are tax-exempt, so you can claim for relief of tax on any interest on a mortgage loan - but not any other type of loan.

Enquiries relating this type of tax relief should be made to TRS Section, Collector-General, Sarsfied House, Limerick. LoCall: 1890 463 626

Selecting Your Solicitor

It is important that you find a good solicitor to handle your trading up property purchase.

Abilities and prices charged vary widely, and the first step should be for you to contact any friends or relatives that have recently sold or purchased a property, and ask what they thought of their solicitor.

If you get any recommendations also check them up online - bad solicitors are often easier to find online that good ones, since people tend to complain more vociferously than they mete out praise.

Whichever solicitor you finally decide upon, you should calculate the cost to be 1.5% of the purchase price of the new property. It might be less, and occasionally slightly more, but you have to start somewhere with your calculations and 1.5% is a good figure. You should then add VAT onto that. The solicitor will also add on charges such as for phone calls, faxing or letters, and they will also have to make a payment to search the Land Registry and Registry of Deeds during their conveyancing search.

These are the various factors to take into consideration when considering a trading up mortgage, and purchasing a new higher value home for yourself. If you follow the advice given, you should reduce the stress of changing homes a bit, and perhaps find the whole process just a little bit easier.