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The true cost of moving home
By Sarah Modlock
Along with the huge amounts of stress and emotion you can expect when you move home, you also need to prepare to spend huge amounts of money. And not just on gallons of tea and biscuits for the removal men.
Yet British people are compulsive house-hoppers
and neither the huge costs nor sanity meltdown incurred can deter us from our quest to climb the property ladder. Gluttons for punishment, the average Briton moves home between three or four times in a lifetime, latest research from Abbey Mortgages shows. Abbey has calculated that, excluding property prices, Britons looking to get on the property ladder could spend the equivalent to £54,400 in today's money moving home during their lifetime. That's 2.3 years worth of annual salary based on the current average UK wage - enough to buy a two bedroom Finca in the Costa del Sol or a brand new one bedroom apartment in the centre of Bordeaux.
Looking at the fees charged by lawyers, estate agents, financial advisers, removal firms and stamp duty, added to the money spent to get their property in a 'saleable condition', homeowners said they'd forked out £16,000 on average at their last move. Based on these figures Abbey estimates that in 2006 alone Britons spent a combined £28 billion to up sticks.
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Nici Audhlam-Gardiner, Head of Mortgages at Abbey, said: "It's no secret that moving home is an expensive business - in fact, I'm sure it's one of the reasons why people don't move that often. But it's astounding when you consider just how much it amounts to over a lifetime. With the average Briton expecting to spend over two years annual average salary just meeting the costs of professional fees and stamp duty of their three or four moves, homeowners clearly need all the help they can get."
Hidden costs
Drew Wotherspoon of John Charcol, urges anyone moving or buying their first home to look out for hidden costs: "Buyers tend to get caught up in the excitement of choosing a new home and run the risk of paying the price financially by not ensuring they get the best value from their mortgage. If you're willing to bargain over fixtures and fittings it also makes sense to look at the other ways you can get a better deal when you move. As a mortgage will be, in the vast majority of cases, the most expensive commitment, borrowers should start here."
Early Repayment Charges (ERCs) are a part of most mortgages, but some have more favourable terms than others. Some only have ERCs during the initial competitive rate, whilst others have overhanging ERCs which lock a borrower in whilst still paying a lender's Standard Variable Rate. "There is virtually no need for any borrower to have to accept overhanging ERCs with the competitive nature of the UK market and the number of deals available to consumers," says Wotherspoon. "Taking a mortgage where there are only ERCs within the initial, favourable term makes sense for most borrowers but it may be a good idea for some to have no ERCs at any time. You are likely to pay a little more in interest for the privilege, but it can be the right decision for those who need the flexibility of not being tied in."
Exit fees come under a variety of names including administration charges, sealing fees or deeds-release fees. They tend to be around £195-£295 but this figure is rising as lenders look to recoup lost revenue from competitive rate pricing. It may not seem like a huge sum of money in the scheme of things, but these charges have seen an unnatural rise over the last three years and are a clear sign of lenders simply making money out of the consumer. Wotherspoon advises that at the very least you should make sure you are aware of what the fees are on your deal.
If you cannot provide a large deposit, watch out for higher lending charges (HLCs). They are applied by lenders, usually on loans over 90% loan to value, who view these borrowers as a greater risk because they haven't shored up their borrowings with a down payment. "First time buyers don't need to put up with Higher Lending Charges anymore," says Wotherspoon. "Lenders are now coming out with some great products for those wanting to borrow as much as 100%.
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Solicitors and surveys are both essential in the home buying process but some people often forget to add them into the cost of moving and receive both a surprise and very unwelcome bill when they can least afford it. The average homeowner needs to factor in £500 in solicitor's fees and as much as £900 in surveys costs if you want a full structural survey.
Move your identity
Incredible though it may seem, nearly a quarter of home movers don't have their post re-directed and are at risk of identity theft and fraud.
"It's no surprise almost half of all cases of ID theft in the UK happen at a previous address - people are handing fraudsters everything they need on a plate," says MyCallcredit director Alison Nicholson. "Moving is stressful enough already without having to deal with the impact a fraudster can have on your life. If you don't sort out your post, documents which can identify you, and your credit file, you could be in for months of misery where you are turned down for credit and can't even sign up for a new mobile phone," she warns.
How to do it…
- Get your paperwork in order and shred any documents you're not going to move with you.
- Check your credit file online to see what information is held about you.
- Inform lenders of any unused credit facilities that can be closed.
- Check for old catalogues you've used to buy things in the past and inform the supplier that you are moving.
- When you get to your new home, register on the Electoral Roll at your new address immediately.
- Make a list of every financial company you deal with and inform them of your change of your address.
- Contact the Royal Mail and arrange for your mail to be re-directed to your new address for a year. This will also give you a chance to cancel anything you don't want and send your new address to anyone you have forgotten.
- Consider registering free with the Mailing Preference Service. They will ensure your name is removed from direct marketing lists at your previous address.
Click here for more help on preventing ID fraud
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