Planning is essential for success. When considering whether to move while you’re in London, you should take a good look at your finances and how the move could affect them.
In asset management company Mercer’s 2021 Cost of Living City Ranking, London shifted up one place from being the 19th most expensive city in the world to live in last year to being the 18th this year. That’s not good news if you plan to continue living in the city, so you have some big questions to ask. Below we suggest some crucial questions to ask:
Can I afford it?
This is perhaps the number one thing to ask above all else, even if more material matters fall lower on your list of priorities. According to Zoopla estimates, the average house price in London is £696,453. Flats have sold for an average of £557,779.
If you’re thinking of jumping off the rental market and getting on the property ladder, you have a job on your hands. Reporting figures from Halifax, consumer organisation Which? stated on its website that first-time buyers in 2020 paid a deposit of around £130,357 on average on properties in London, which was more than twice the UK average of £57,278.
The Government’s generous London Help-to-Buy scheme makes life easier for first-time buyers. You’ll be able to put down 5% as a deposit, borrow up to 40% from the Government and the rest from the bank. This effectively lowers your interest rates and makes your application more attractive to lenders.
Remember, too, the other costs around moving, such as transferring your belongings to your new home, estate agents fees, stamp duty and, if you’re renting, cleaning before you move out. This will give you an idea of the true cost of moving.
Will it affect my future finances?
You might have enough money now, but what about the ongoing costs of living in the city? Council tax is one big cost to consider. Depending on the borough you move to and the band the property is in, your council tax bill could drop to as little as £700 per month or climb to more than £3 000 or anywhere in between the two. Property prices have gone up during the pandemic, of course. Will you still be able to cover the rent or the mortgage payments if they increase?
Another thing to keep in mind is that the stamp duty holiday finishes at the end of September. If you forget this and buy after this time, you might find yourself paying significantly more than you were expecting in expenses.
Do I even want to move?
There’s no two ways about it: London is the place to be. But have a think about your reasons for wishing to move and whether there’s a case for staying where you are? Do you still like the borough you’re in? Do you feel at home in your home? Your emotions will have a powerful say in your decision and even though things are going great where you are, the question is: could they be even better elsewhere?
Would renovation be a better option?
Are you happy where you are but still not feeling fully satisfied? Renovating or remodelling your home might be the answer. In both cases, this is a question of long-term thinking. Is the plan to have more kids? Are you trying to create a space for parents to move into when they grow old? If you’re living in a less than desirable neighbourhood, you may not wish to spend a lot on transforming your home into a more high-end property.
How will it affect my professional life?
How will moving affect your employment status? Maybe you want to seek new opportunities. You should also factor in the length and costs of any commuting. The latter soon mount up and, often, your workplace isn’t close by. As a rule of thumb, you’re likely allowing yourself at least an hour to get to work and other places when it comes to commuting. Will a move increase the commute even more?
Moving is a big decision. Personal finances are a big issue, given that the general cost of property and living in London is so expensive… unreasonably expensive, some would say. The best approach would be to think about your reasons for wishing to move, doing some solid research and working out whether you can truly afford the move. Good results come from good planning.
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