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  • FIRST POST
    • MistyRose22
    • By MistyRose22 17th May 17, 10:13 PM
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    MistyRose22
    Selling a property that has increased in value
    • #1
    • 17th May 17, 10:13 PM
    Selling a property that has increased in value 17th May 17 at 10:13 PM
    Hey
    This is my first post here, I hope someone can help me! Apologies if this has been asked before, I have been googling for a while and can't find any helpful info, I struggle to get my head around all this mortgage stuff!
    Two and a half years ago my partner and I bought our first property, a flat, on a 90% mortgage. It was at the top end of what we could afford based on what the banks would lend us at the time. We were on a 2 year fixed rate and when that ended a few months ago, the property was valued at £40,000 more than what we'd bought it for, due to the work we've done and the rising prices in general.
    We are hoping to upsize to a house if we can in a few more years. My salary has gone up a little in the last few years, but not enough to make a huge difference to what we will be lent. My question is, because the flat has gone up in value, what happens to that increase when we move? Does it mean we get potentially £40,000, to help us fund moving somewhere bigger? Or does the lender take it from what we haven't paid off yet? Or another alternative that I haven't thought of?
Page 1
    • leespot
    • By leespot 17th May 17, 10:20 PM
    • 542 Posts
    • 434 Thanks
    leespot
    • #2
    • 17th May 17, 10:20 PM
    • #2
    • 17th May 17, 10:20 PM
    The 40k is yours, you can do whatever you like with it when you sell, although putting it towards another property sounds your best plan
    • gettingtheresometime
    • By gettingtheresometime 17th May 17, 10:24 PM
    • 2,580 Posts
    • 5,685 Thanks
    gettingtheresometime
    • #3
    • 17th May 17, 10:24 PM
    • #3
    • 17th May 17, 10:24 PM
    If you sell the property for X but owe Y on the mortgage you'll have (X-Y) to put towards the mortgage on your new property.

    So if you can get a mortgage of Z now , theoretically you can buy a new property for Z +(X-Y)
    Lloyds OD / Natwest OD / PO CC / Wescott cleared thanks to the 1 debt v 100 day challenge


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    • G_M
    • By G_M 17th May 17, 11:03 PM
    • 40,625 Posts
    • 46,481 Thanks
    G_M
    • #4
    • 17th May 17, 11:03 PM
    • #4
    • 17th May 17, 11:03 PM
    Some real figures would make it easier, but here's an example.

    * you bought for £200,000 with a 90% mortgage
    * so your mortgage was £180,000
    * you sell now for 240,000
    * your outstanding mortgage is 160,000 (you've been paying a bit off every month)
    * it costs you 2% (4,800) to sell (estate agent, solicitor etc)

    So after the sale you'll receive 240,000 - 160,000 - 4,800 = £75,200

    Now do a more exact calculation yourself with real figures. You'll need to ask your mortage lender how much you now owe (the 'redemption amount').
    • trevormax
    • By trevormax 17th May 17, 11:03 PM
    • 841 Posts
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    trevormax
    • #5
    • 17th May 17, 11:03 PM
    • #5
    • 17th May 17, 11:03 PM
    edit: blast G_M and his faster typing skills
    *shakes fist*

    (figures used are for illustration purposes only and doesnt include fee's, costs etcbla bla bla)

    House bought for £100k.
    £10k deposit used.
    £90k mortgage used.

    2 years later, House now worth £140k
    mortgage payments made brings outstanding mortgage down to £85k (this figure is plucked from the thinnest of thin air)

    Equity on house is £55k (140 - 85).

    You sell the house for £140k. You pay off outstanding mortgage of £85k leaving £55k.
    You can use the remaining £55k for a deposite on a new, bigger house.
    If you can still only get £90k of mortgage, you can now buy a house worth £145k.
    This mortgage is 62% of the property value meaning you would probably get a better deal on the interest rate compared to a 90% mortgage.
    • eddddy
    • By eddddy 17th May 17, 11:08 PM
    • 4,966 Posts
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    eddddy
    • #6
    • 17th May 17, 11:08 PM
    • #6
    • 17th May 17, 11:08 PM
    The £40k is yours to put towards another property.

    But remember that, just like your property, all the other similar properties will have gone up by £40k as well.

    And a bigger property may have gone up by £50k or £60k.


    So unless you have some savings, or you get a bigger mortgage, you probably won't be able to buy a bigger property than you already have.
    • G_M
    • By G_M 17th May 17, 11:24 PM
    • 40,625 Posts
    • 46,481 Thanks
    G_M
    • #7
    • 17th May 17, 11:24 PM
    • #7
    • 17th May 17, 11:24 PM
    So unless you have some savings, or you get a bigger mortgage, you probably won't be able to buy a bigger property than you already have.
    Originally posted by eddddy
    .... unless you move from London to Cornwall.....
    • MistyRose22
    • By MistyRose22 17th May 17, 11:35 PM
    • 2 Posts
    • 0 Thanks
    MistyRose22
    • #8
    • 17th May 17, 11:35 PM
    • #8
    • 17th May 17, 11:35 PM
    Excellent, thanks for the replies! We are definitely not in a position to move yet, but will be looking to move to a cheaper area and somewhere that is in need of modernisation to make it possible. The fact that we have done work on our property hopefully also means it's value has increased faster than other places on the market.
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