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Selling a house and buying a new one calculator 2022

Calculating the costs of selling a house and buying a new one

If you’re currently considering selling your house to buy a new one, you might be wondering what your property is worth. It’s normal, because you want to be able to calculate how much money you’ll have so that you know which price bracket you can look at for your new home.

Thing is, when you sell and buy a house, it’s not like when you sell and buy a car.

For example, if your car is worth £2,000 and the car you want to buy is valued at £6,000, the cost to change will be £4,000. It’s pretty simple.

However, the cost to change your home isn’t quite so straightforward.

The reason for this is the commission and fees that you’ll need to pay when you move, especially if you choose to use an estate agent.

What you need to know is the amount you’ll get after the sale; the sum that’ll be in your bank account when everything has been completed.

To calculate this, you’ll need to know:

  • how much, if anything, remains on your mortgage
    (you can find out this figure by contacting your lender)
  • the amount for which you can expect your house to sell
    (an estimate from an estate agent will give you an idea, but you can also do some research online to find the sold prices of local properties that are similar to yours)
  • the commission or fee charged by your selling agent
    (often this will be 0.75% to 3.0% plus VAT for an estate agent and it will be based on the final sale price)
  • conveyancing fees
    (expect to budget somewhere from £550 up to £1,500 including VAT)

According to the Homeowners’ Alliance, solicitors usually charge £500 to £1,500 on legal fees. However, this doesn’t include other charges which could total more than £600. These additional charges will include (for example):

  • Title deeds: £25
  • Property fraud fee: £10
  • Transferring ownership: £200 – £300
  • Bank transfer: £20 – £30
  • Money-laundering checks: £8pp
  • Searches: £250

As previously mentioned, selling with an estate agent means you won’t know exactly how much you will sell your property for until your sale completes. However, you’ll have a rough idea of how much you might get, based on your estate agent’s valuation.

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Now, let’s go through the figures with a practical example.

Your gross profit will be:
sale price – (mortgage balance + cost of selling)

So, on a sale price of £200,000, an outstanding mortgage balance of £60,000 and selling costs of £5,000, the equation would be:

£200,000 – (£60,000 + £5,000) = a gross profit of £135,000

In the majority of cases, the mortgage on your existing home will be paid off when you sell your home. The solicitor / conveyancer that is dealing with your paperwork will contact your lender to get a redemption statement and then repay the outstanding loan amount to them by using the funds from the house sale.

Can I move my mortgage to my new home?

If you’re selling your property in order to move to another one, and you have an outstanding mortgage balance, you’ll need to ‘port’ your mortgage. Porting will usually come with fees and there will be different costs applied, depending on whether you are increasing or decreasing your level of borrowing.

The process of porting is the same as if you were switching to a new deal or a new lender because you’re asking to borrow against a different property. You will have to reapply for the loan and your affordability will be reassessed (although the deal remains the same with the same interest rate and the same terms). In addition, the home you’re buying must be valued by the lender (so that they can check their investment is viable), so you will need to pay a valuation fee as well.

An option with no costs to you

As you can see, selling a home can be expensive. But there is another way that won’t charge you any fees.

A way to get a quick (and guaranteed) sale is to use a cash buying company. There are lots out there all claiming different qualities, so do plenty of research and read online reviews to make sure you know all about the company with which you’ll be dealing. A great place to read reviews is allAgents; it’s a review website for estate agents and cash buying companies.

Cash buyers

Cash buyers work with motivated sellers to push through a fast sale. Their promotional tools are speed and simplicity. Their job is to buy properties that are either difficult to sell or whose owners need cash in their bank account very quickly.

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To achieve these super-fast sales, you as a seller will have to take a hit on your price. Cash buyers typically offer around 70% to 80% of the current market rate, although some will offer more. Whilst this may sound like a low price for your property, it could actually save you money because you won’t have to pay agency fees or conveyancing fees. Also, a cash buying company will buy your property in ‘as is’ condition. This means you won’t have to spend money on decorating to prepare your home for a sale (as you would with an estate agent).

If you’re considering a cash buyer, you must be aware of two important points.

Firstly, there’s little regulation in this industry so it’s a haven for scammers. Anyone can set up a business and say they’re a cash buyer. However, that doesn’t mean they have cash or that they’re competent. It’s up to you to do your due diligence and check where their money comes from, what experience they have, the price they offer and everything else.

Secondly, cash buyers are a business and like any business, their aim is to make a profit. Some cash buyers are sniffing around for what they call ‘the three D’s’; divorce, death and debt. These three situations generate the most emotion, making sellers more desperate and weaker in negotiations.

Having said all that, a reputable cash buyer can be a life saver to you in a tough situation and, as long as you have done your research to fully understand the company with which you’re dealing, a cash buyer can produce great results for you, too.

The amount that a fast sale company will offer to you for your property will depend upon the company. Some of the most reliable cash buying companies will use independent valuations to decide on a figure and show you the evidence that has enabled them to decide on that number.

Meanwhile, other companies may not use such respected methods and instead flatter you with a higher offer on the phone; only to reduce it when they visit your property. It’s essential to ensure that the valuation you get is a ‘no obligation’ valuation; meaning you’re not forced to sell to that company just because they visited and valued it.

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Equally, estate agents and online agents may suggest you pitch your property with an asking price at the top end of the valuation and then after being on the market for a while, they’ll suggest you lower the asking price. All of this takes time, holds up your sale and will cost you money.

How does a cash buying company actually work?

Companies that buy houses will buy your house fast for cash, usually within 30 days, with most completing the sale within 7 days. When you contact these house buying companies, they’ll ask for your details and those of the property, after which they’ll have a valuation. Then they’ll give you an offer. If you accept the offer, they will process the payment and you should receive funds in your account within a few days. This means you don’t have to worry about being in a chain or chasing up an estate agent. It also means you know exactly how much you’ll receive and, because you’re not paying any commission or fees, it’ll be easy to calculate how much you’ll have available to buy your next home. These are things you just can’t put a price on!

When will I receive the money from selling my house?

Whichever method you choose to sell your home, you’ll receive the money from your house sale after the process ‘completes’. This is the day that the keys are exchanged, and the buyer is now the official owner of your property. When the buyer’s conveyancer has sent over the money to your conveyancer, they will pay all the necessary fees due, and then send over the remaining amount to your bank account.

Any questions?

We hope you’ve found this article to be informative and helpful and explained to you more about the costs involved with selling your home and buying another one, as well as how you can save money when you decide to sell.

To get your free, no-obligation offer for a cash sale, call us, or send an email.