Homeowners taking their second step and trading up to a bigger home need to find £136,000 helped by recent equity gains.
Research from Lloyds Bank shows that home movers buying their next property must find on average £135,985 to trade up, usually a detached house with a price of £347,281.
The typical Second Stepper bought their first property in 2014 when the average price for first time buyers stood at £167,137 and is likely to sell for £211,296.
There have been equity gains in their first home and strong house price growth means they will have £85,877 to help contribute to their next home so second steppers need to find another £50,108.
In London the gap is greater with second steppers selling for £422,329 to buy a detached house for £722,929 making a difference of £300,599.
More difficult to sell their home
Of the households in the research, 35% believe it will be more difficult to sell their home this year with concerns over the economy, the larger deposit needed and shortage of suitable properties.
With competition from buy-to-let investors and reduced supply of suitable properties, home movers are remaining in their existing home and saving for a bigger deposit.
Andrew Mason Lloyds Bank Mortgages Director said, the interest rate rise last year marks the first increase first-time sellers have seen as homeowners and has caused some concern.
Second Steppers are optimistic about the market conditions, which are now better than they’ve been for over five years with low mortgage rates benefiting first time buyers, home movers and remortgage buyers.
Many have been building up substantial equity in their homes and with more first time buyers entering the market, their next move may not be far away, says Mr Mason.
Of the second steppers 48% were attracted to town living with 40% opting for a village location and only 31% intending to relocate to the countryside.
In terms of the type of property, 37% would like a period property, 36% preferring a new build home with a quarter looking for a recently developed or renovated property and only 21% looking to renovate a property.
Staying and make improvements
Of those second steppers 35% think it will be harder to sell their existing property this year compared to a year ago with 29% worried about the uncertain economic climate.
Some 30% feel the deposit size required for moving remains a key challenge and 26% are struggling to find the right property to move to.
Fewer suitable homes could be partly due to older homeowners not downsizing, with higher activity from equity release buyers accessing property wealth using a lifetime mortgage to consolidate debt, for home improvements or holidays.
For many second steppers, if they cannot sell their current home they 40% intend to make home improvements which has increased from only 34% in 2016.
Even so, 40% believe market conditions have improved since last year and 52% feel there are now more first time buyers in the market, up from 43% a year ago.
Of those asked, 52% also think the stamp duty changes announced in the Budget last year will increase the number of first time buyers entering the market even further.
What are your next steps?
Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.
Learn more by using the mortgage cost calculators, equity release mortgage calculator and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.
For equity release buyers our London City Mortgage brokers can recommend lifetime mortgages allowing you to receive cash from your property to help maintain your standard of living as costs rise.
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