If you are looking at trading down from a larger to a smaller home, you are likely to have lived in your home for some years.
The good news is you probably own your property outright – over 50% of homeowners today in England do - or you are likely to have lots of equity and when you trade down it may mean you won’t need a mortgage at all.
However, there are downsides to trading down:-
The way you buy and sell has changed a lot over the last 5-10 years
Smaller properties may not be cheaper, depending on location
You have to let go of a lot of stuff between exchange and completion
So here’s our quick guide, with help and advice from Humberts:-
Try to take your time!
When you are trading down, it may be that you have an idea of what you want, but don’t rush into it. It might have been a dream home abroad or in the country, but is that still the right thing for you? Whatever you do, don’t rush the decision, make sure the property and location is right now and into the future. You can even spend time going to new areas you’d like to live and staying there at weekends or for a week or so – is the location really what you’d hoped it would be?
And new rules now mean you have to provide proof of identity to agents and to legal companies before they can help you with your move.
If you are over 60 - think about access to healthcare, shops, friends and family
Moving abroad for the sun, moving to the country and enjoying rural life. And this might work for you for a while. But bear in mind what happens when you – or your family are sick or something goes wrong – can you get the help you need being so isolated?
If moving abroad, you have the complication of health care and also exchange rates which can make or break your standard of living and there is nothing really you can do about it, bar hedging your bets through a foreign exchange company.
Don't rush into buying in a new area, consider renting first
A good way of working out if your future lies in a different property type and location is to rent there first and hold onto your own home. Renting for six months or so may cost a few extra thousand at the start, but it won’t cost as much as making the mistake of selling up, buying and then having to do it all over again – which could cost tens of thousands of pounds!
Research Energy Performance Certificates (EPC’s)
When you sold your house in the past, there was no need for lots of paperwork and certificates. Now there is a massive requirement to have all the paperwork possible.
The first piece of paperwork you need is an Energy Performance Certificate. This has to be available for buyers when the property is ready to be viewed. It shows how well your property is heated and keeps the warmth in. The average home is a ‘D’ rating – anything less than this can mean expensive heating bills, anything more means utility running costs are likely to be lower.
Choose a Legal Company as soon as you put your home up for sale
If you have lived in your home for many years, you are likely to have had some electrical, gas safety, building work done. All this will need to have the relevant paperwork which says the work was carried out by an approved contractor. This could take a few weeks to pull together, so if you are sure you are moving, rather than wait until you have found somewhere to buy.
So get your legal contract and paperwork done on your sale so you can do the work required and when you buy, you will have more time to worry about checking out the property you want to purchase.
Checkout sold property prices
There is now a wonderful resource which allows you to see how much your neighbours property has sold for and others similar to yours – right back to 2000. This is a good way of working out what you think your property is worth, before the agents come round. This means you can spot the agent overpricing or under pricing your property for sale.
One other change since the credit crunch is that property prices can differ substantially even from one side of the road to the other because of school catchment areas or due to one end of the road being more desirable than another.
Budget for the move
Making sure you know all the costs of buying a property are – from stamp duty to legal costs – and those for selling are important. Agents typically charge between 1-2% or on-line agents may charge an upfront fixed fee of around £1,000.
See Kate's ‘property calculations’ page
Visit an IFA/tax advisor to know what to do with the excess money
If you are trading down and thinking about how you are going to distribute money to kids or indeed use it for a pension pot, it is essential to go and visit an IFA like www.chasedevere.co.uk. There are lots of ways to gift money which can be tax efficient but this is really something you need to work with a professional to do.
For more information and help buying and selling, read our checklists:-
