Author: Richard Norfolk

Mobility in the jobs market can be vital for progress in your career, but the costs incurred can be considerable if you move any distance and moving home becomes necessary. If it can be helped, these should not be allowed to affect your decision to live nearer to your new employment, but you need to ensure that you are aware of the likely total cost.

A report quotes a cost of over £5,500 to move house, based on the current average property price, so you may need to temper that enthusiasm for a grand mansion with a little realism regarding affordability. There will be several different companies who want to have a share of your hard earned cash, and of course the government will also want to profit by your move.

Your first investigation should be into the new mortgage which you will need. You may not have moved home for some time, but even so it is likely that you will have a reasonably up to date picture of the way that property prices have moved – if not, you are in for a shock! First of all you should look at the basics of the mortgage market to see the different types available, and what repayments will be required. Armed with this knowledge, you will be able to start looking for suitable properties, being careful to bear in mind that your costs will not start and end with mortgage repayments.

The governments share in your endeavours will be in the form of stamp duty, which does not seem to have any particular purpose except to enrich the treasury. Currently this cost comes into play on properties where the price exceeds £125,000, which in many parts of the country means that most if not all will carry the 1% additional cost on amounts above this figure.

The next threshold is at £250,000, above which stamp duty climbs steeply to 3%; this on-cost is now reaching very significant proportions and must be taken into consideration. It is worth noting however that if a property is priced by the sellers at a level just above a stamp duty threshold, they will be fully expecting strong negotiations aimed at bringing the price down to the lower level.

The treasury is taking stamp duty at the rate of £5 million per annum – don’t encourage them by unnecessary additions to this sum!

Whilst searching for suitable property you could spend some time in lining up a solicitor and also take an initial look at the mortgage market. You can expect the solicitor’s services to cost in the region of £500; set this money aside along with an additional £900 if you are going to require a full structural survey, which is usually advisable.

When you have a reasonable idea of the type of property which will meet your needs, your investigations into the many types of mortgage available can move on in greater detail. If you have a mortgage on your present property you need to be aware that you could face having to pay early repayment charges or ERCs. At this point you should talk to your current mortgage provider, as they may waive these charges if your new mortgage is to be with them.

If you are likely to have to move home again you could check the future situation – will you be charged ERCs next time? You will need to shop around and do your sums. Another penalty which could be applied if you are well into repayments on your existing mortgage is exit fees, also known as deeds release or admin costs (or whatever other name your provider chooses).

The only purpose for these seems to be to extract funds from a departing customer, although mortgage providers would argue that competition has forced prices down to the point where any loss of revenue has to be dealt with. The amount involved is not great but even £300 or so is a cost to avoid if possible. Ask your current provider about ERCs or exit charges applying if you stay with them.

A lender may adjust his risk assessment applying to your new mortgage if you can only pay a small deposit, and higher lending charges may be incurred by you. On the other hand competition for your business is having an effect on some of these extraneous charges, and more companies are accepting that lack of a lump sum deposit does not necessarily indicate inability to meet regular payments; loans of 100% are no longer rare.

The moral is to keep checking and keep adding up the extras as well as the large mortgage payments because they are all costs which have to be met. After all, even the furniture removers need to be considered. They will not work without payment and you literally will not get far without them.

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