*This is a collaborative post
Upsizing, or moving into a bigger home, is a natural phase of life on the property ladder. At some point or another, you’ll likely need to find a larger property to live in than your current one — perhaps you’ve started a family, own more possessions or just fancy a bit more space.
If a move is on the cards, you need to know whether you can afford it. Taking the next step on the property ladder makes a lot of sense, in terms of both a lifestyle change and economically, however you’ll need to manage your finances sensibly if you’re to achieve it.
Here are three tips to maintaining good financial health whilst looking to upsize.
Self-renovation to add value
The best thing you can do to climb the property ladder is to think about adding value from the moment you move into your new home. Renovating a house yourself — anything from updating the décor to a full revamp of a dilapidated property — will add significantly to its resale value.
If you take on a project and pump a bit of your own money in alongside your time and labour, you’ll find a great return on investment from your efforts, which will increase your upsizing potential.
Have you made a profit?
Whether you’ve done work on your home or not, you need to review where its value stands when you intend to sell. If you’re looking at a profit, this bodes well for taking on higher mortgage payments on your new, more expensive home.
Timing is everything in the property market. Like any other buy and sell situation, you want to buy low and sell high. Hopefully, you bought your home at a point where the market was in a slump and has since built back up, meaning you can sell it at a much higher value. Even better, if you can find an upsize opportunity that is selling for below market value, you stand in good stead to repeat your success when you look to upsize for a second time.
Can you afford the costs?
Upsizing, unfortunately, isn’t just a matter of selling your old home and buying the new. There are plenty of hidden administrative costs you’ll need to consider as part of your upsizing budget. Buying (legal fees, survey costs, stamp duty, mortgage payments) and selling (legal and estate agent) fees need to be taken into account as well as potential increases in living costs such as council tax, utility bills and maintenance costs.
Ahead of an upsizing venture, it’s important you lay out these costs clearly as part of your budget. If you don’t, you could find yourself in a sticky situation half way through the process.
Much of upsizing efficiently comes down to common sense budgeting and timing, but it should never be taken lightly. Do it well, and you could lay the foundations for you to continue on your way up the property ladder over the next few years.