April 12th, 2022

5 vital questions to ask yourself when considering upsizing your home

In December 2021, the Guardian reported that the UK’s “race for space” could have pushed house prices up by one-fifth in some towns.

Indeed, since the Covid-19 lockdowns of 2020, you might have considered how having a bigger home could be beneficial for you and your family.

There are plenty of amazing positives you could experience from having a larger home. If your family is expanding with children or grandchildren, for example, it may feel wonderful to provide them with the space to thrive.

In addition, if you are now working from home on a permanent basis, it may feel like the right time to find a home that meets those needs.

If you are deciding whether to upsize, there are considerations to make, in order to assess whether this is a financially viable move for you and your loved ones.

Here are five vital questions to ask yourself when considering upsizing your home.

1. Will a bigger home help me achieve my goals in the coming years?

Of course, figuring out whether you can afford to upsize is crucial.

But before you get to financial decisions, it might be helpful to consider whether moving to a larger home will help you achieve your life goals in the coming years.

We have all dreamt of living in a big house with plenty of space, but when you consider your plans for the coming decades, is a larger home part of your practical plan to achieving your dream life?

For example, if you wish to have more children, it might be necessary to live in a larger home in order to comfortably accommodate a bigger family. Or, you could see upsizing as an investment opportunity for the years ahead, if you plan to renovate your home and sell it on in future.

By getting a clear vision of the life you want, and seeing where a larger home fits into that vision, you could have a better idea of whether upsizing is right for you.

2. Have I budgeted for the Stamp Duty on my new home?

Once you decide that upsizing is the best decision for you and your family, it is important to consider the administrative costs that come with it.

If this is the second home you have bought, you may not have paid Stamp Duty before. First-time buyers don’t pay Stamp Duty on homes worth less than £300,000, meaning this could be a new consideration for you and your loved ones.

You will normally pay Stamp Duty on any home you buy worth more than £125,000, as long as it’s not your first home. The amount of Stamp Duty you pay will depend on the value of your new property, and how many properties you own in total.

When budgeting for the Stamp Duty on your new home, it may be constructive to consult your financial planner for guidance.

3. Can I secure the mortgage deal I want in a time of rising inflation?

In addition to Stamp Duty, you may need to consider how rising inflation could have an impact on your mortgage application.

Indeed, according to an iNews report from February 2022, some mortgage lenders are tightening their affordability criteria, to account for the effects of the cost of living crisis.

So, you could encounter challenges you haven’t met before when applying for a new mortgage – especially if this is a bigger mortgage loan than the one you had before.

What’s more, you could pay higher interest on your mortgage repayments in 2022 than if you had bought a home in 2021. The Bank of England (BoE) raised the base rate to 0.75% in March 2022, up from a historically low 0.1% in March 2021.

It may be beneficial to consult your financial planner on how your new mortgage application could be affected by inflation. We can help.

4. Are my family and I ready to take on additional maintenance costs?

In February 2022, energy regulator Ofgem increased its energy price cap by 54%, a change that has come into effect in April for most households.

You may already be concerned about the rising energy costs in your current home. If you are contemplating upsizing, it is important to ask yourself if you can take on the additional cost of maintenance in a larger home.

Although energy prices may decrease again in the years to come, it could be wise to assume that the cost of energy will remain high for the foreseeable future, and to budget accordingly when searching for a new home.

5. Have I made the most of professional guidance when deciding to upsize?

Upsizing could be an incredible move for you and your family, but of course, like any financial transaction, it comes with risk.

We can connect you with lenders who could help secure the mortgage deal that works for your family, and help you prepare for your application in an economically uncertain time.

By consulting your financial planner about the decision to upsize, and reviewing the above considerations with them, you could gain the peace of mind that you’re making the right choice for you.

Get in touch

If you need guidance on upsizing your home, get in touch. Email enquiries@prosserknowles.co.uk or request a callback from one of our advisers.

Please note

This article is for information only. Please do not act based on anything you might read in this article. All contents are based on our understanding of HMRC legislation, which is subject to change.

Furthermore, this article is no substitute for financial advice and should not be treated as such. To determine the best course of action for your individual circumstances, please contact us.

Your home may be repossessed if you do not keep up repayments on a mortgage or other loans secured on it.

Buy-to-let (pure) and commercial mortgages are not regulated by the FCA.

Think carefully before securing other debts against your home.


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