Five ways a professional money blogger prepares for moving house
Super savvy money blogger Emma Drew is buying a house with her husband. She's sharing her top tips with us on how she's prepping for her mortgage, savings and future house move.
For my husband and me, buying our first home together is a really exciting prospect, and whilst we are working towards our savings goals for our deposit and other expenses, there are also other things we are doing to prepare for a mortgage application and future house move.
1. Saving for a deposit and other fees
The first and probably most important thing that we are doing to prepare for a mortgage is to put together our savings for the deposit and additional fees. Most of us have an idea that a house deposit should equal 10% of the house cost, but there are a lot of other additional fees and charges that come with buying a house. Some of these costs include:
- Stamp duty (unless you’re a first time buyer and your house is worth under £500k
- Mortgage arrangement fee (only on some products)
- Home survey
- Land registry fees
Then you need to consider removal costs, end of tenancy cleaning (if applicable) and even the potential cost of paying for your old rental property for a month or so whilst you move into your purchased property. Sitting down and doing all the sums on these numbers was a real eye opener, but at least we know all the things we have to save for.
2. Cutting back our spending
Cutting back on our spending has two great benefits. We can put more money towards our house deposit savings, and our affordability for our mortgage application has less outgoings so the lender knows that we can pay our bills and the mortgage.
Although we’re always thrifty, we have been taking a closer look at our spending to see where we could cut back. In the past year we have cancelled our TV licence because we don’t watch live television or BBC iPlayer, switched utility providers and really trimmed down our spending. Meal planning has had a great impact on saving - where we take a look at what ingredients we already have in our kitchen and try to plan a week’s worth of meals with those ingredients. It has not only saved us money but also helped to reduce our food waste.
3. Opening a LISA
Since I am not a first time buyer a LISA won’t help me for a home, but my husband Tony is a first time buyer and can benefit from having a LISA. Tony recently went along to The Nottingham to open his LISA towards our house purchase. You can apply for your online Lifetime ISA here.
A Lifetime ISA, or LISA, is a Government scheme to help you to save either towards your first house purchase or towards retirement once you reach 60 years old. In order to open a LISA you need to be aged between 18 and 39 and be a UK resident but you will get a 25% bonus* from the Government for any money you put into your LISA. If you want to use a LISA towards buying your first home then you can use the money 12 months after your first deposit and use it towards a home up to the price of £450,000.
As well as the Government’s 25% bonus, The Nottingham give you 1% in interest paid every 5th April - and this is tax free! There is a 25% withdrawal charge for ineligible withdrawals which means anything that isn’t a first house purchase, retirement at aged 60, death or diagnosis of a terminal illness with less than 12 months to live.
4. Checking our credit report
Credit reports show an overall picture of your financial situation, showing if you owe any money to creditors and how well you manage your repayments. This is then used to create our credit score. Having a higher credit score means that we will be more attractive to potential mortgage lenders, and we could have access to better rates. We have been carefully monitoring our credit reports and credit scores to make improvements where we can. Really simple changes like making sure you are on the electoral roll and making any minimum payments on time can make a massive difference. We have also used this as a chance to review our open credit accounts, like store cards and credit cards and close the ones that we don’t use including those that don’t have good rates, offers or benefits for us.
The maximum you can save each tax year is £4,000. The Government will pay a 25% bonus of up to £1,000 each tax year. You can withdraw money from a Lifetime ISA to buy your first home, or at age 60. Other withdrawals will usually mean a 25% Government charge, so you could get back less than you put in. Full terms and conditions are available at thenottingham.com. Nottingham Building Society, Nottingham House, 3 Fulforth Street, Nottingham NG1 3DL
Decluttering is great for your mindset, but it is also great for preparing for a mortgage and a house move. Decluttering and selling our unwanted items means we can put more money into our deposit and fees savings, and it also means that we have less stuff to move when we do buy a house. Check out The Nottingham’s guide for 4 steps to an organised home for even more tips on decluttering. If you are planning on a mortgage application in the next few years then you might want to start preparing for your move now by following some of the tips above.