Home Money Tips Looking for a bigger kitchen?

Looking for a bigger kitchen?

by Victoria Baker

Let me guess: The house of your dreams has Pinterest-worthy landscaping, a beautiful huge kitchen, 2.5 modern bathrooms, stunning wood floors, and enough room for the whole family for a little privacy they need. Maybe it’s not the home yet you actually own. If you feel that you have outgrown your current home, you might want to consider the option to move or expand. 

In 2020, the COVID-19 pandemic affected every sector of the economy all over the world. The UK Government published a guide on home moving during the coronavirus outbreak. This guidance provides advice to the industry and those moving home in accordance with the lockdown. 

Banks are exploring options to make it easier to get a mortgage, on the back of concerns that many first-time buyers have been locked out of the property market during the coronavirus pandemic. They are reviewing the mortgage market recommendations to take account of record-low interest rates, which should make it easier for a homeowner to repay.

Another great news is that the housing market will remain open during the lockdown. This means that everyone who looking to move to a new home will be able to both continue with their planned moves or also view new properties to move into in the future. Realtors, removers, valuers, and people in sales are allowed to show homes and will be able to continue working. It also applies to custom and self-builders looking to acquire a plot or a property to renovate or demolish. Electricians, engineers, plumbers, and other traders can still visit your home to carry out repairs during coronavirus – as long as they are healthy without any coronavirus symptoms. Of course, they have to keep 2 meters away from you and avoid any vulnerable people. 

Moving vs. Remodeling: What’s the best for you?

Remodeling may not be as exciting as buying a new home, but it could be a more cost-effective move in the end. This is partly because moving itself is costly — as is selling your existing home.

A major factor for those thinking about relocating is the rising prices. Sellers will get a higher price for their house, but they will almost definitely pay more when it is time to secure a mortgage for a new property. There are also other expenses to remember. Prices for other necessities, such as homeowners insurance and property taxes, could rise as a result of rising sales prices. Many of those costs will accumulate over time.

The first thing that makes a big difference is whether you got a good deal on your current home? If you bought your home for cheap, but the buying costs in your area are currently high, you do not want to start with a larger house and a larger mortgage. You may have a lot of equity in your current home, but if you sell now and buy a home at a much higher asking price, you’ll deplete it all.

Next, you should think about your housing goals for the next five to ten years. If you like your house and it is convenient for your job and family, it will make sense to remodel and work with what you have. If you plan to relocate in a few years, you may want to consider staying put and not remodeling now and wait for an opportunity to buy something that fits your long-term expectations.

Reality Check: How Much Can I Afford?

When you’re about to buy a new home, it may be tempting to look for the biggest or most expensive house you can afford based on what you qualified for. However, the calculated mortgage amount you may qualify for doesn’t necessarily mean the same amount that you can afford for real. Unfortunately, it doesn’t mean you’ll be able to pay it back in the end.

When deciding how much you can afford for a new house, the general rule of thumb is known as the 28/36% rule. This rule suggests that individuals shouldn’t spend beyond 28% of their gross monthly income on housing expenses and 36% on their total monthly debt payments.

The highest possible front-end ratio, represented by 28%, is the largest percentage of your income that should be allotted to mortgage payments. And 36% represents the highest possible back-end ratio, also referred to as the debt-to-income ratio, which you now know is the percentage of your income that’s set aside to pay off debt.

Useful Tools: Try a Home Affordability Calculator

Instead of taking a leap and suffering from it later, use a home affordability calculator. The home affordability calculator will provide you with an appropriate price range based on your situation. Most importantly, it takes into account all of your monthly obligations to determine if a home is comfortably within financial reach. After entering in basic information about your annual income, monthly debts, savings, and location, this online tool calculates a few different estimates you can use to begin your home search but also offering some tips to determine how much house you can afford on your budget.

To calculate your own numbers, visit: www.mortgagecalculator.uk. In this calculator, you can include investments, annuities, alimony, government benefit payments in the other income sources. Be sure to select the correct frequency for your payments to calculate the correct annual income. A couple of other things which make their site quite unique are the graphs of loan repayment along with monthly and yearly amortization tables, and additional calculators which have features like estimating mortgage affordability based on income, printable amortization schedules, loan overpayments, etc.

Are You Ready to Move Up in House?

Moving up to a larger home can feel like a complicated task. But you’ll gain confidence by working with an experienced real estate agent. A good one will help you price and sell your current home on your timeline and guide you in your search for a new home you’ll love. Ultimately, you should choose an estate agent that you feel comfortable dealing with and who you feel will look after your best interests as a seller. For a quick and easy way to find the top-performing agents in your area, try here.


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