Hello, I'm Iona Bain and welcome to A Little Bit Richer, brought to you by Legal &; General. Now whether it's your first time or you're ready to upgrade your space, buying a home is one of the biggest financial and emotional decisions many of us will make. From figuring out what you can afford and navigating mortgage options to managing the legal process and understanding recent government changes, it can
all feel a little bit overwhelming. So today we're going to walk you through this journey with none other than Sarah Tucker. Sarah is the founder and CEO of the Mortgage Mum, a national mortgage and protection broker. She's a qualified mortgage advisor, podcast host, and you'll often see her as the mortgage expert on our ITV's This Morning, so she really is the perfect person to make us feel confident
about our next move. Welcome, Sarah.
Hello. Thank you for having me.
So if you're thinking about buying somewhere for the first time or you want to make that next move, what do you need to think about, especially when it comes to recent changes that might affect that process? Talk us through what's been happening in the world of mortgages and home buying.
Well, it's been a lot of change, so there's been good change and there's been some negative change. So let's start with the negative because then we can move on to good news. The negatives is that the interest rates have been higher, although we are starting to see them come down, but they are fluctuating. We've got inflation that's higher and the general cost of living is higher, so
people are a little bit more risk averse. But the good news is affordability is on the up, so lenders
are lending more than they previously did. The mortgage stress rates in the background, they used to really hinder affordability for people because they're making sure you can afford the mortgage if rates do go up more, but because interest rates went up so much, those stress rates were really affecting affordability and they've been reduced now, which is brilliant because that means affordability is a lot better. So there's
some really positive news. The house prices haven't escalated too quickly. You've obviously got world news, it affects the market as well, but generally things are a lot more positive. The Bank of England base rate's come down quite a few times.
And it's not just about the mortgage, is it? There are a whole set of other costs that people need to consider when they're buying property.
Absolutely, and if you're a first time buyer, I think we always just think about the deposit, but you do have to think about the other fees. So I did get an example of a 400, 000 pound house with a 10% deposit, just to give you a bit of a flavor of the different categories because when you first sit with someone, you go, " Okay, how much deposit have you got? Okay, have you got stamp duty?" And for a 400,000
pound house that's 10, 000 pounds. And then you need solicitor fees to make sure that they can do the transaction for you. That can be $ 1500 to a couple of grand, depends how complicated it is. You've then got removal costs if you want help. Lots of people say, " I can do it myself," it's fine, but you'll still probably need a van of some sort. So you need to factor that in. And if you're buying a house, we
recommend a homebuyers valuation. You can get a normal valuation, but you're looking at 350 pounds or you might be lucky and get one free with your mortgage. But a homebuyer's valuation is really good because it shows you what money you're going to need to spend on that property in the next few years. Of course, a mortgage advisor could cost you money and fees and generally with a mortgage
you'll have an arrangement fee. So going back to this example of a 400,000 pound property, yes you need a 10% deposit, which is 40, 000, but you've probably got to factor in this scenario about 15, 000 in fees, maybe a bit less, maybe a tiny bit more, just depending on the different things you select on that process. That gives you an idea as to the cost of moving as well that you just need to factor in.
And that's just before you've stepped foot in the property and have to think about renovating it.
Yeah, exactly.
So we've talked about how you navigate this. If you are a first time buyer, what if you already own a property and you're looking to move? What are all the different steps of the journey then?
Number one is looking at your current mortgage. So you might have a fixed rate that you are in and that you might even be tied into that for longer than you want to be when it comes to moving. So the first thing I want people to know is that you can potentially port your mortgage and that will avoid you
paying an early repayment charge. But the limitation of that is that you are with that lender if you've got a fixed rate usually, and you have said to that lender, " Effectively, I'm going to keep this for two years or five years," and you'll see in your mortgage offer that if you do end that early, they will charge you something and it can be quite a bit of money.
So make sure you're looking at that first that you know where you stand with your mortgage, and that comes into your affordability anyway to look at how much equity do I have in the property? So you could have paid off quite a bit of your mortgage in the time you've lived there and the property could have gone
up in value for example. And then subsequently you've got to look at how much your property is worth and start getting it valued by estate agents to put it on the market and sell it. That's where we come into what estate agent should I pick, how do I
know what it's worth? But when it comes to selling, your house is worth what someone's willing to pay for it, so rely on your local estate agents because they really should be able to show you comparables and tell you what they think it will sell for. And so when we talk about the cost of moving, you need to look at estate agency fees. Now they vary from
one and a half percent of the property's value. They could be more than that, it could be less than that, it depends if you can negotiate. And they're going to want to know if you're going to go exclusively with that agent or with multiple agents.
You spoke before about the changes that have happened with mortgage affordability. And is that because mortgage lenders are coming up with new products and want to draw more borrowers in?
Yeah, I think there's more innovation definitely. So we're seeing products like the Helping Hand Mortgage for Nationwide, for example, six times your income. We've seen lenders like April Mortgages come out with seven times income. Now these are specific
products. They're still a general rule of 4. 75 times your income, but there are lenders out there who are really trying to be innovative, whether that is giving you an opportunity to have additional boosting on your deposit or giving you additional affordability like you say. So it's definitely a lot more positive than it was.
So how do you work out how much someone can borrow?
So it depends with every single lender how much you can borrow, and I really want to make that point clear because you might be tempted to go on a calculator or AI and ask how much you can borrow. But let me tell you, it's completely different for every lender. It's not just about the lender that lends the most, it's the lender that lends the most to you
in your specific circumstance. If you pay childcare costs or you've got credit cards, but you are clearing them every month, you have different ways of the lender looking at your credit card balances. Some will ignore them if they're going to disappear and some won't. So these are just ideas and examples of how different lender underwriters treat each client and each case, the good news is that's our
job. We spend a lot of time in the background building relationships with lenders so we can really understand who they're trying to market.
And you touched on the government as well and the regulator, the FCA that stands for Financial Conduct Authority and they are conducting a review at the moment of the mortgage market and talking about bringing back certain products like interest only mortgages, mortgages with higher deposits, even a hundred
percent mortgages. What are your personal views around those kinds of solutions for people who might otherwise struggle to get funding for their mortgage?
We've just had the 100% mortgage launched by April Mortgages recently, and we were right at the forefront of that. And honestly, just in that product alone shows how needed is because we had over 2, 000 people contact us in the first day of it coming out. Actually a lot of them just didn't have the right advice. They could actually get a mortgage, they had 5% saved, they
didn't think that was enough. So they came to us because of the 100% mortgage, but perhaps actually they've got a 95% mortgage and they got different advice. They still think 20% deposit is where it's at and they think they're so far away and actually they could be able to move now.
And that's where advice can be really, really critical. But there may be people watching all listening who will think, " Well, why can't I just go to my bank and ask what they can offer me? Because I already have a current account with them or maybe some savings with them. Surely they'd be able to help out and surely that would be a lot quicker and more straightforward than
going to a mortgage advisor." What would you say to that?
They absolutely can. You are very welcome to do that and lots of people still do, but just know there's a whole world out there that you're not looking at and you're not seeing the whole picture.
You could go to your bank, but the analogy that I thought of was that if you go to your bank and ask for the mortgage that they would offer you, it's like going to a clothes shop that you've always gone to in the past and asking them to recommend you clothes when there could be a whole load of other shops on that high street.
Yeah, I like that. Good analogy.
I thought you would. Can you briefly talk us through the stages and timings in a typical home buying process, so what it means to go from in principle to completion?
Okay, so should we focus on a first time buyer or a home mover? What do you think?
Let's focus on a first time buyer.
Okay, so a first time buyer, you're going to speak to an advisor, you're going to know how much you can borrow, so you're going to feel really confident and they're going to give you something called an agreement in principle. So that means they've done a credit search with a lender that they think is the best lender for you
in that moment. Hopefully they're doing a soft credit search on you so we're not leaving too many footprints on your credit file because too many of those is a bad thing. And you've got hopefully a certificate or some people do these passports now on your Apple Wallet. So you've got proof to an estate agent I can borrow enough money to look at these properties. And that's the
best bit because you know what you can afford. You're going on Rightmove or Zoopla or other sites looking at houses, speaking to estate agents saying, " Tell me what I can look at, that's in my price range." And it's your job to find the one. And you've got a mix of head and heart decisions through the buying process. Head
is the money, heart is the property. You're going to know within 10 seconds apparently when you walk through the door and you just feel like, " Oh, oh." And as you walk through the property, you'll just start to know, " I really like this." And that's a magic feeling. Wait for that feeling. It's like love. Don't kind of make it fit because you're in a rush, wait for the right
property. When you do find the one, you will panic because you'll love it. And anything that involves the heart, you just lose your head and go, " Oh my gosh, I've forgotten everything that the advisor told me and I don't know what I'm doing." That's why an advisor is so important because when you are in this space, that's where you'll live for the rest of that transaction, we
are staying in the head for you. So you're saying, " I'm in love with this property. Okay, how much is it? Amazing. Okay, yeah, that's fine. We'll get you, there's an application in. My estate agent's saying I need a server." That's fine. We'll talk you through. We'll instruct that. So we'll just try and keep it calm and exciting in the background, but we'll be squirreling away to make
sure all your paperwork sorted. You will then need a solicitor. They are as important as your advisor if not more so, so really try and find someone that's recommended because they can slow down your transaction or speed it up and they really need to be good to be able to give you everything you need. Not to go into the legal process too much because I might bore
everybody, but they're going to search the property. They're going to make sure that everything is as it should be. In the meantime, we are getting your mortgage offer. Once you get your mortgage offer, our job is technically done, but that's not how we work at the Mortgage Mum. We will then chase your estate agent, your solicitor, anyone else we need to make sure everything's running as it
should and update you along the way. Make sure you have a protection conversation. It's not just about getting your mortgage, it's making sure you can keep it. So have that while you're excited because it's too easy to just say, " Oh yeah, look at that later. I just want to get the house first."
And this is about making sure you insure your income.
Insured your, income protection, that if anything happens to you, that mortgage gets paid off for your family. So think about how much you love it and think about the fact you don't want to lose it if something out of your control happens. And that's a horrible thing to talk to an excited buyer about, but it's so important.
So people will talk to you about exchanging. That means the property is yours, everybody signs in your chain, say it's yours. And then completion's when you actually put the
key through the door. I mentioned the word chain and I just want to sit on that for a minute because if you're a first time buyer, it's not as simple as just finding that property and saying, " Yes, I want it," because whoever owns that might have to buy somewhere else and then that person might have to buy somewhere else and what have you. So ask the estate agent
what the chain looks like. And if you see something that says " NO ONWARD CHAIN" in capitals on Rightmove, the reason why is because that's such a positive. It means it's just you and the buyer and you are going at your pace.
So just be mindful. That's kind of the thing that's out of your control, so you do have to surrender a little bit to the process and just do what you can, but the timing will be what it is basically.
Well, let's talk through the process of selling your current home. What do you need to consider?
Okay, so first you need to know how much you can sell it for. I would always recommend you speak to three agents, at least I have a rule of three.
Three?
Three agents because the first one might be inclined to over- hype your price. The second one might be really conservative. The third one might be just right, like the three little pigs.
You've got to look for Goldilocks.
Exactly. The rule of three is really important because it gives you an overall picture and take your average from that. And really listen to what everybody has to say. We all want our property to be worth the most, of
course we do. But if someone's telling you, " It will sell better if you put it up for this<;" they are a professional in their own right and you should listen to them if you get that gut feeling for them as well. I have found out about house dressings. So have you heard of this?
House dressing?
So these are companies who will dress your home to sell it. So they will hire furniture, they can decorate it. Essentially, imagine a film set, but they're doing it for your house.
Right. It's like a glow up.
It's a glow up. Yes, they should rename it, that's a brilliant idea. And it adds up to 10% to your purchase price they say and sells your home three times faster. And I really believe this is the psychology of the new buyer, especially people that love Pinterest, vision boards like me.
But if you can't afford say, a home dressing company, there are simple things you could do yourself.
Absolutely. I think removing clutter is a big thing. Just do a Monica, shove it all in the cupboard, just don't open the cupboards on the viewing. And simple things like flowers and right now it's quite a new concept, but I'm seeing more and more companies pop up and I'm seeing more houses on Rightmove have this kind of glow up.
It's all about tapping into the psychology of the buyer, isn't it, and really trying to get them to imagine themselves living in your property?
Absolutely. But equally, if you are somebody that can look past it, credit to you because having that vision, that is a gift. Not everybody has that. And if you can see what you can do to a home, that's an amazing thing as well.
Because that's where the bargains are.
Exactly.
So, if you are buying your first home with a partner, that adds a whole extra layer of complication as I've been finding out in recent times. Can you talk through what some of the hurdles there are for couples that are looking to buy?
Yes. So if you are a couple and one of you as a first time buyer and the other isn't, sadly the first time buyer kind of just misses out on what they would've had if they were buying without that person, which is a compromise. That could have been a stamp duty saving, it could be a first time buyer only product even from a mortgage company. But I want to caveat, it's more likely to be the stamp
duty that's going to be the disappointment. There are first time buyer products, but there are also really great products if you have owned property before. So just really mindful of that stamp duty conversation. We do see couples where you've got other properties as well. So one of you might own another property or even both of you might
own another property. And if you think about the timing and the chains that we just spoke about and now imagine, well that's got its own chain and that's got its own chain. There's lots in there that affects stamp duty as well. So if you have a second properties, 5%
additional stamp duty will be paid. However, if you're selling your main residential and you're going to buy another residential, but you haven't sold this one yet, so you technically have two properties, you've got up to 36 months to
reclaim that stamp duty back. So it is a timing thing, and it really depends on that love that I said about earlier that if you really love a property, some people will go as far as getting bridging loans to make things work because they haven't sold a property and they need the money to get the next property and they don't want to lose that one. So imagine
doing that on your own. You've got to have someone there that's holding all of those balls for you and juggling them in the background so that you can focus on the emotional journey that you're on of selling two places to buy one. So yeah, it is a bit more complicated if you're buying as an established couple I would say that have more properties in the background.
So this has been such an interesting conversation, Sarah, but I wonder if you can maybe distill what we've learned into three tips for navigating the home buying process.
So number one, I think create a team. So whether that's your advisor, a good friend that you can voice note endless thoughts to, a good solicitor, create yourself a squad to get yourself a property.
I was just about to say squad.
Yeah. So create yourself that squad because it's not just your advisor, you need all sorts of people. Number two is get your head facts together before you start emotionally making decisions, and then once you've got your squad, you can then lean into the heart space and really enjoy
the process. It is stressful and I'll tell you why it's stressful because there's so many emotions wrapped in and you're out of control and that's not something a human really likes. So just try and be patient. Try and do the head stuff first. And number three is yeah, try and enjoy it because there's certain moments in life, if you have children, if you get married, they become
stories as you age. And your house is huge story in your life. And I do believe our properties hold us through different periods of our life for a reason. So try and immerse yourself in the experience good and bad.
Yeah, take the rough with the smooth.
Yeah, and trust the process. You will always end up with the place you're meant to be in.
After going through quite a lot of home buying turmoil in my life, that's exactly what I needed to hear.
Oh, good.
It's going to happen.
It's going to happen. And when it does, it would all make sense. And you'll go, " I'm really glad all these rubbish things happened because now I'm here." And whatever that moment is for you, just keep visualizing it because it will happen.
Brilliant. This is the pep talk that I needed.
Good.
Thank you, Sarah. You really helped clarify that home buying and selling process for us in a way that I'm sure everyone will find very helpful. Next time, friend of the show, Claire Barrett will be back to debate property versus pensions. Should you prioritize getting on the housing ladder and paying your mortgage or perhaps put off the property
dream to save more into your pension? I'd love it if you could follow the podcast, leave us a review, and help others get a little bit richer too. This podcast is brought to you by L&; G. You can keep up the show on YouTube, TikTok, and Instagram at Legal &; General. Until next time, happy house hunting and see you soon.