Why it’s getting harder to move up the property ladder

If you’re looking to move home, perhaps because you’ve outgrown your current property or you want to move nearer to work, getting on that second rung of the property ladder can be a real challenge.

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Soaring property prices combined with steep moving costs pile the financial pressure on homeowners, making it a struggle to move on.

Our latest research has found that a third (34%) of homeowners think it’s going to be difficult to move, with those aged between 35 and 54 finding it particularly tough-going. Of this age group, 41% said they thought it would be hard to move to a bigger home, compared to 28% of 18-34 year-olds.

Often this is because at that later stage in life there are kids to support, which makes it tricky to build up enough savings to cover costs.

On average, current mortgage holders believe they’ll need to save £10,549 if they’re going be able to move – no mean feat if you’re also shelling out for childcare costs.

Kevin Mountford, head of banking at MoneySuperMarket said: “There was a time when those in the 35 to 54 age group would have been looking to downsize, but now this is the age group where people are starting a family in some cases or still housing grown up children who are struggling to find their own way.”

The older you are, the shorter the mortgage term

The 35-54 age group also faces the problem that lenders will usually only offer a mortgage repayment term up to retirement age.

If you’re in your mid-40s, for example, that means you will probably only be offered a 20-year mortgage term, which means monthly payment costs will be much higher than if you repaid what you owe over 25 or 30 years.

Let’s say you needed a £250,000 mortgage at the age of 30. If you opted for the market-leading two-year fixed rate mortgage at 1.05%, your monthly cost over a 30-year term would be £810.

But if you’re aged 45, monthly payments for the same-sized mortgage over a 20-year term would cost £1,155, or a whopping extra £345 a month.

Save save save!

Lack of savings is often the biggest stumbling block when it comes to moving home.

Almost half (47%) of those questioned by MoneySuperMarket said house prices are so high they can’t afford to take the next step yet, while 43% can’t afford moving costs such as stamp duty, mortgage arrangement fees and legal costs.

Londoners unsurprisingly think they need to squirrel away the most in order to move home, estimating that they’ll need on average £12,946 - almost half the £6,772 that those living in the North East think they will need.

How much you will need to save differs between cities alongside house prices. Our best family cities interactive tool reveals the average house price throughout various cities in the UK.

Silver linings

Despite the cost of moving, it’s not all doom and gloom if you’re looking to upscale your home. Rock bottom interest rates mean that mortgage rates are lower than ever, so there’s seldom been a better time to get a mortgage.

Kevin Mountford said: “The good news for those looking to move is that there’s a great deal of competition in the mortgage market at the moment. We’ve seen a huge drop in fixed mortgage rates over the past few years, some with manageable fees. Perks such as free legal costs and free valuations on properties are also offered by some lenders in order to get customers through their doors. As such, there really hasn’t been a better time to get a mortgage.”

The good news for those looking to move is that there’s a great deal of competition in the mortgage market at the moment

But remember – although low fixed rates might look appealing, they often have a sting in the tail in the form of hefty arrangement fees. So be sure to factor this in when you’re comparing deals.

For example, the Post Office offers the market-leading two-year fixed rate mortgage priced at 1.05%* for those with a 40% deposit. But it has a hefty arrangement fee of £1,995.

Meanwhile, Yorkshire Building Society offers a two-year fixed rate mortgage at 1.07%**, but the fee is lower at £1,499. It also requires a smaller deposit of 35%.

If you were to borrow £150,000, over two years you’d pay £15,644 with the Post Office, but £15,181 with Yorkshire Building Society. So it’s the deal from Yorkshire Building Society that works out cheapest overall.

*Reverting to standard variable rate currently 4.49% after two years. The overall cost for comparison is 4.0% APR. Early repayment charges apply during the fixed rate period. Other fees may apply, see T&Cs

**Reverting to standard variable rate currently 4.99% after two years. The overall cost for comparison is 4.5% APR. Early repayment charges apply during the fixed rate period. Other fees may apply, see T&Cs.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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