If you’re planning to sell your property to buy another home, you’re a second-time buyer. As a result, you’ll likely have a different experience when getting a mortgage the next time around, and you may have alternative fees that you’ll need to factor into your budget.
As you’ll want the process to be as stress-free as possible, you need to find out about your mortgage options, deposit requirements, and more. Here’s what to expect as a second-time buyer.
A Less Stressful Process
The mortgage process will likely feel less stressful as a second-time buyer, as you’ll already know the processes you can expect and the various actions that you’ll need to take. As a result, you can set time aside to gather all the information needed to quickly secure a mortgage and buy your desired property.
A Larger Property Deposit
Most second-time buyers will need to pay a larger deposit on a second home. As a first-time buyer, you may have taken advantage of a government-backed scheme, such as Help to Buy or Right to Buy. However, many government schemes aren’t available to second-time homeowners, and you’ll typically need a minimum 10% deposit to buy your dream property. If you’re selling your first home, you can transfer the equity from the property sale to help to fund your second property.
Stamp Duty Requirements
If your first home was less than £300,000, you were likely exempt from paying stamp duty. However, second-time buyers will need to factor it into their finances when buying another property over £40,000. Be sure to include it in your calculations to avoid an unexpected expense when investing in a new home. Check out a guide to stamp duty made easy to learn more about the tax involved and how to pay it.
Review Your Credit Score
Your finances may have changed since you purchased your first home. Paying a mortgage each month without fail will have improved your credit score over the years, which will increase the likelihood of being accepted for a mortgage.
If you’ve missed mortgage repayments or failed to pay your debts in line with the schedule, it’s possible that your credit score may have plummeted. If this is the case, it may affect your ability to get a mortgage on a second home or to secure another loan.
Even if you’ve repaid your debts on schedule, it’s worth checking your credit record for any possible inaccuracies that could affect your mortgage application. However, you must avoid checking your credit history too much, as too many hard searches will make you appear too reliant on credit to a lender.
There are many considerations to make and fees to calculate as a second-time buyer, which will help you avoid one or more unwanted surprises. Yet, your knowledge and experience may help you feel less stressed and more organized during the mortgage process. As a result, you can focus more time and energy on improving your finances and packing your belongings for a fresh start in your beautiful new home.