Can You Afford To Sell Your Home?

Selling a home is a chance to make back some of the money you’ve poured into your property. However, how much money you get for the sale depends on the current value of your home. You also need to pay off any remaining mortgage debt, as well as being able to cover other moving fees. This includes all the costs involved with buying a new property if you decide to purchase a new property. All of this can cost thousands of pounds – potentially more than you can afford to pay. Here are some considerations to help you decide whether selling your home is affordable right now.

How much equity do you have?

How much of your mortgage have you paid off? This will determine how much equity you have. If you’ve paid off £150,000 (not including interest), that’s £150,000 that you’ll get back in your pocket after you’ve sold your home and paid off the remaining mortgage. 

If you put down a low deposit and have only been at your property for a few months, but want to move, you may not have much equity to spend. Experts recommend having equity worth at least 10% of the value of your home (if your home is worth £350,000, you’ll want to have paid off at least £35,000 of your mortgage already)

What is the value of your home?

It’s worth noting that the value of a home can change over time. Many homes increase value, so you may end up with much more equity than you expected. 

Of course, homes can also lose value over time, in which case you’ll get back less money than you’ve already poured into your home. If you’ve not been at the property for a long time, you may find that you cannot afford to cover the moving costs.

Can you cover all the moving fees?

There are so many different moving fees to consider. Here are just some of the fees that you will need to be able to cover using the equity you’ve built up:

Selling costs

• Agency fees: Estate agents will typically charge a commission fee equal to 0.75% to 3% of the sale price (£2,625 to £10,500 for a £350,000 home)
• EPC: An energy performance certificate is legally required to sell a home and can cost between £60 and £120. 
• Conveyancer fees: You will need to get legal help with moving home. On average, conveyancer legal fees cost anywhere from £500 to £1000. 
• Early mortgage repayment fee: Unless you have paid off your mortgage or you plan to remortgage with the same lender, you will likely need to pay an early mortar repayment fee – which can be equal to 1% to 5% of the remaining mortgage.

Moving costs

Buying costs

• Mortgage down payment: Applying for a mortgage on a new property typically requires paying at least a 5% deposit – with most lenders wanting 10%. 
• Other mortgage fees: There are other potential mortgage fees to cover including application fees and valuation fees, as well as broker fees if you used a mortgage broker. This could add up to as much as £3,000. 
• Conveyancer fees: You will also have to pay legal fees when buying a property.
• Home survey: A home survey is recommended to determine the condition of the property you are buying. This can vary from £300 to £1500. 
• Stamp duty tax: If you’ve already owned a home, you’ll have to pay stamp duty tax on your new property. This is a percentage fee that depends on the value of your home (usually several thousand pounds). 

Can you afford to sell?

Making sure that you have enough equity to cover all of these costs is crucial if you want your move to be a success. Of course, if you have any savings set aside, you may be able to put these towards some of these costs. Make sure that there aren’t any other big costs on the horizon – you may not be able to afford these on top of moving.