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  • FIRST POST
    • AHIM
    • By AHIM 3rd Oct 17, 10:12 AM
    • 4Posts
    • 2Thanks
    AHIM
    Upsizing
    • #1
    • 3rd Oct 17, 10:12 AM
    Upsizing 3rd Oct 17 at 10:12 AM
    I purchased a property in 2009 for £200000 and am looking to upsize to a property worth about £550000. I have a number of questions regarding this which I hope you can help me with:

    A) The price of a nearby flat of exactly the same size and shape recently sold for £325000. Another flat of exactly the same size and shape went for £295000 in January 2016. Would it be reasonable to conclude from this that my flat would have increased to at least £325000? Also, I have paid £130000 into the flat. As such, could I conclude that the deposit for a new property would be £125000 [profit from flat] + £130000 [equity] = £255000?

    B) I don't have too much cash in hand at the moment (only £5000) so presumably I would need to save up for stamp duty (or could I use the profit from my existing property for this)?

    C) My salary is currently about £57000. I am guessing that I would be allowed to borrow about 4 times my salary from a bank. That would mean about £228000. Is this a reasonable assumption?

    D) Other expenses include solicitors fees, estate agents etc.... How much does this typically cost?

    E) I am 39 years old. Can I still get a mortgage as I have read in a few places that the payment for mortgages should be completed before the age of 65. Is this correct?

    F) Are there any other expenses that I have missed?

    Thank you
Page 1
    • Scotbot
    • By Scotbot 3rd Oct 17, 10:21 AM
    • 72 Posts
    • 39 Thanks
    Scotbot
    • #2
    • 3rd Oct 17, 10:21 AM
    • #2
    • 3rd Oct 17, 10:21 AM
    Firstly get 3 valuations from Estate agents, it's free. Go with the lowest valuation for your budget. This will also tell you how much their fees are,
    Secondly get online quote from a solicitor for selling and buying. Again free. You can pay stamp duty out of the equity from your current flat whatever that is. Can't help with the mortgage question.
    Other fees are survey costs.
    • hazyjo
    • By hazyjo 3rd Oct 17, 10:31 AM
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    hazyjo
    • #3
    • 3rd Oct 17, 10:31 AM
    • #3
    • 3rd Oct 17, 10:31 AM
    A) Probably, presuming the lease length is similar and you're on a similar floor. If you're in a middle floor flat, it might not sell quite as easily. Also depends on location - some areas have increased, others static, some have dropped. The figures look right.


    B) You can use the equity.


    C) Try some calculators - impossible to predict without knowing your outgoings. 4x sounds roughly right. Shouldn't be too risky on a large-ish salary but not sure if the bank will see it like that.


    D) I'm selling at £515k and buying at £430k. My buying costs are in the region of £20k (removals, EAs, survey, solicitors, stamp duty, etc).


    E) I'm 47 and getting one, but mine is for 16 years. Some offer longer terms, but they're limited. If you can get one paid off by 64 (what some require), that gives you approx. 25 years still so you're fine.


    F) Lots of smaller ones, but nothing major leaping out.


    I've not done the maths with your figures, just answered questions.
    2017 wins: Opera tickets; film preview; lipstick; Ideal Home Show tickets + afternoon tea & bottle of Champagne; 2 cases of NKD; notebook; bath rack; books; film Premiere; Broadchurch DVDs; lipbalms; hamper (food/wine/Echo Dot/Jo Malone goodies); Avon lippies; cowhide rug; Windsor luxury break, foundation; Flybe flight
    • hazyjo
    • By hazyjo 3rd Oct 17, 10:32 AM
    • 9,624 Posts
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    hazyjo
    • #4
    • 3rd Oct 17, 10:32 AM
    • #4
    • 3rd Oct 17, 10:32 AM
    Also, negotiate with EA fees. You shouldn't have to pay more than 1%. Get a good mortgage broker if you're not confident doing your own mortgage homework.


    YBS have good calculators and mortgage products. Always come out good for me.
    2017 wins: Opera tickets; film preview; lipstick; Ideal Home Show tickets + afternoon tea & bottle of Champagne; 2 cases of NKD; notebook; bath rack; books; film Premiere; Broadchurch DVDs; lipbalms; hamper (food/wine/Echo Dot/Jo Malone goodies); Avon lippies; cowhide rug; Windsor luxury break, foundation; Flybe flight
    • scottishblondie
    • By scottishblondie 3rd Oct 17, 10:44 AM
    • 1,974 Posts
    • 1,251 Thanks
    scottishblondie
    • #5
    • 3rd Oct 17, 10:44 AM
    • #5
    • 3rd Oct 17, 10:44 AM
    Assuming that you do have equity of £255k (sale price less outstanding mortgage) and can borrow £228k, that gets you to £483k. This means you would have a shortfall of £67k on your desired purchase price of £550k. Realistically with very little cash to hand you'll need to subtract from your equity:

    - Estate agent fees for sale (negotiable, usually a percentage of the sale price)
    - Solicitor fees for sale
    - Solicitor fees for purchase
    - Survey and mortgage fees
    - Moving costs
    - Stamp duty (£17.5k on £550k purchase)

    Which looks to put you very roughly at a shortfall of at £87k or more. I'm afraid to say that at this moment in time, upsizing to a property at that price point appears to be out of your reach.
    • saajan_12
    • By saajan_12 3rd Oct 17, 11:01 AM
    • 844 Posts
    • 553 Thanks
    saajan_12
    • #6
    • 3rd Oct 17, 11:01 AM
    • #6
    • 3rd Oct 17, 11:01 AM
    I purchased a property in 2009 for £200000 and am looking to upsize to a property worth about £550000. I have a number of questions regarding this which I hope you can help me with:

    A) The price of a nearby flat of exactly the same size and shape recently sold for £325000. Another flat of exactly the same size and shape went for £295000 in January 2016. Would it be reasonable to conclude from this that my flat would have increased to at least £325000? - No, two properties are not representative as they could be skewed by specific circumstances. Better get a valuation from (a few) EAs (and haircut this as they will be optimistic). Also, look at the average SOLD price (not for sale) of several properties in the area / same no. bedrooms. Also, I have paid £130000 into the flat. - Was this 13k interest or capital repayment? Irrelevant though. As such, could I conclude that the deposit for a new property would be £125000 [profit from flat] + £130000 [equity] = £255000?
    Equity = Current property value - Mortgage balance
    - Current value from average of EA valuations / several sold prices
    - Mortgage balance from the latest statement you recd or ask your current lender.


    B) I don't have too much cash in hand at the moment (only £5000) so presumably I would need to save up for stamp duty (or could I use the profit from my existing property for this)?
    Before completion you're likely to need to pay:
    - solicitors & searches fees
    - mortgage broker fees
    - survey costs
    - mortgage application fees
    - 10% deposit on exchange(you can pass on 10% deposit from your sale and either top up the rest or negotiate a lower % on your purchase)

    The rest can be paid on / after completion from your sale proceeds and any mortgage you get on the new property, e.g.
    - pay off mortgage balance
    - Mortgage Early Repayment Charges (if any)
    - stamp duty
    - balance of solicitors fees
    - EA fees
    - balance of purchase price (usually 90%)


    C) My salary is currently about £57000. I am guessing that I would be allowed to borrow about 4 times my salary from a bank. That would mean about £228000. Is this a reasonable assumption?- broadly reasonable but get an AIP from a lender to get a better idea.

    D) Other expenses include solicitors fees, estate agents etc.... How much does this typically cost?
    Solicitors & searches £500-£2000 depending on area / which searches you do
    EAs typically 1-2% of sale price


    E) I am 39 years old. Can I still get a mortgage as I have read in a few places that the payment for mortgages should be completed before the age of 65. Is this correct? - You'd be fine with a 25year mortgage

    F) Are there any other expenses that I have missed?listed above

    Thank you
    Originally posted by AHIM
    Get more solid numbers by
    - Current property value: Get 2-3 EA valuations and look at a larger sample of sold prices in the area

    - Mortgage balance: find a statement from your lender showing the balance left to pay off and any ERCs

    - Equity: Current property value - Mortgage balance

    - New mortgage affordability: Get an AIP from a lender or speak to a mortgage broker

    - New property budget = New mortgage affordability + currenty equity - costs
    Last edited by saajan_12; 03-10-2017 at 11:04 AM.
    • AHIM
    • By AHIM 3rd Oct 17, 11:50 AM
    • 4 Posts
    • 2 Thanks
    AHIM
    • #7
    • 3rd Oct 17, 11:50 AM
    • #7
    • 3rd Oct 17, 11:50 AM
    All your responses have been very useful. Thank you very much.

    - Based on your suggestions I will try and get valuations from EA's regarding my current property price.
    - In terms of my equity, the last letter I have from my lender (from a few months back) states that I still owe 68K so my equity amount is a little over 132K.
    - I will also try and get an Agreement in Principle to confirm my mortgage amount.
    - It does seem however that 550K is outside of my price range for the time being. In fact 500K is outside of my price range. I typically save about 1.5K per month, so in my estimate it will take about 24 months to save another 36K which should get me to the 500K figure. That said, prices will probably increase between now and then so I might need to save more. Further, I will be 2 years older so might find it more difficult to get a mortgage for a 25 year term.

    Thank yo once again
    • hazyjo
    • By hazyjo 3rd Oct 17, 11:54 AM
    • 9,624 Posts
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    hazyjo
    • #8
    • 3rd Oct 17, 11:54 AM
    • #8
    • 3rd Oct 17, 11:54 AM
    If you do sign up with an EA, you can also negotiate the tie-in period. I hate signing up for more than 8 weeks. My current one was 6, although it did take longer than that to sell. Some on here are ridiculous lengths like 20-odd or 30-odd weeks!


    Is there nothing around your new budget that would be of interest? It'll be a big-ish jump from what you're selling - although if you're buying in a pricier area, I understand you may not get quite so much bang for your buck.
    2017 wins: Opera tickets; film preview; lipstick; Ideal Home Show tickets + afternoon tea & bottle of Champagne; 2 cases of NKD; notebook; bath rack; books; film Premiere; Broadchurch DVDs; lipbalms; hamper (food/wine/Echo Dot/Jo Malone goodies); Avon lippies; cowhide rug; Windsor luxury break, foundation; Flybe flight
    • AdrianC
    • By AdrianC 3rd Oct 17, 12:58 PM
    • 15,276 Posts
    • 13,611 Thanks
    AdrianC
    • #9
    • 3rd Oct 17, 12:58 PM
    • #9
    • 3rd Oct 17, 12:58 PM
    I purchased a property in 2009 for £200000 and am looking to upsize to a property worth about £550000. I have a number of questions regarding this which I hope you can help me with:

    A) The price of a nearby flat of exactly the same size and shape recently sold for £325000. Another flat of exactly the same size and shape went for £295000 in January 2016. Would it be reasonable to conclude from this that my flat would have increased to at least £325000?
    Originally posted by AHIM
    It may or may not be a reasonable assumption. Are they in very similar internal order?

    Also, I have paid £130000 into the flat.
    What do you mean by that?

    As such, could I conclude that the deposit for a new property would be £125000 [profit from flat] + £130000 [equity] = £255000?
    How much is your remaining mortgage? Subtract that from the sale price.
    If you have a £70k mortgage, and the flat sells for £325k, then you have £255k equity. Before the costs of moving.

    B) I don't have too much cash in hand at the moment (only £5000) so presumably I would need to save up for stamp duty (or could I use the profit from my existing property for this)?
    Sure, but you're borrowing the money instead, and paying interest on it.

    C) My salary is currently about £57000. I am guessing that I would be allowed to borrow about 4 times my salary from a bank. That would mean about £228000. Is this a reasonable assumption?
    Perhaps, if your credit record supports it.

    BTW - if you earn £57k, how come you only have £5k in savings? You will have roughly £3,400 per month after tax. Your current mortgage is going to be costing you a tiny fraction of that. What are you doing with the rest?

    D) Other expenses include solicitors fees, estate agents etc.... How much does this typically cost?
    How long's a piece of string. Call it 1.25% for the EA and £2,500+ for the other sale/buying fees. Round it up to £7k, and you're probably not far out.

    E) I am 39 years old. Can I still get a mortgage as I have read in a few places that the payment for mortgages should be completed before the age of 65. Is this correct?
    It depends. You'll only be 64 in 25 years time, and your state retirement age will be 68 anyway.

    F) Are there any other expenses that I have missed?
    Oh, probably a whole load. Removal costs, decorating the new place, new furniture, etc etc etc. You can spend as much as you want to spend.
    • AHIM
    • By AHIM 3rd Oct 17, 1:33 PM
    • 4 Posts
    • 2 Thanks
    AHIM
    It may or may not be a reasonable assumption. Are they in very similar internal order?
    More than likely as my property is in reasonable condition. Truth be told I think that EA's are probably the best option to verify this assumption.

    “Also, I have paid £130000 into the flat."
    ”What do you mean by that?"
    That's my approximate equity in the current property. So I have about 70K left to pay.

    BTW - if you earn £57k, how come you only have £5k in savings? You will have roughly £3,400 per month after tax. Your current mortgage is going to be costing you a tiny fraction of that. What are you doing with the rest?
    For the last few years I have been making regular over-payments on my mortgage, so I typically save about 5k every 3 months which I put into the mortgage.

    Oh, probably a whole load. Removal costs, decorating the new place, new furniture, etc etc etc. You can spend as much as you want to spend.
    In terms of decorating, new furniture etc... I am thinking that this can wait as it is not essential. I was focusing more on immediate essential costs relating to making the move.

    Cheers
    • AHIM
    • By AHIM 3rd Oct 17, 1:35 PM
    • 4 Posts
    • 2 Thanks
    AHIM
    Is there nothing around your new budget that would be of interest?
    Possibly, but I would need to compromise either on the state of the property or the location (or both). I have a feeling I might need to go down this route.

    Cheers
    • ringo_24601
    • By ringo_24601 3rd Oct 17, 1:41 PM
    • 16,966 Posts
    • 27,573 Thanks
    ringo_24601
    BTW - if you earn £57k, how come you only have £5k in savings? You will have roughly £3,400 per month after tax. Your current mortgage is going to be costing you a tiny fraction of that. What are you doing with the rest?
    Originally posted by AdrianC
    There is a very MSE thought process that dictates that people on higher incomes will also have lots of savings. Many people also spend lots of money on other stuff like cars, holidays, doing their houses up, childcare costs.
    • AdrianC
    • By AdrianC 3rd Oct 17, 1:48 PM
    • 15,276 Posts
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    AdrianC
    There is a very MSE thought process that dictates that people on higher incomes will also have lots of savings. Many people also spend lots of money on other stuff like cars, holidays, doing their houses up, childcare costs.
    Originally posted by ringo_24601
    ...and then they look surprised when a lack of savings comes back to bite them...

    Nobody's saying that you can't spend a good chunk of your disposable income. But basic common sense says that you have enough put by to cover several months without income. If you're tied into substantial spending commitments, then that cushion needs to be similarly substantial.
    • Mutton Geoff
    • By Mutton Geoff 3rd Oct 17, 2:03 PM
    • 887 Posts
    • 936 Thanks
    Mutton Geoff
    That's my approximate equity in the current property. So I have about 70K left to pay
    Originally posted by AHIM

    You are confusing your equity relative to your purchase price which is no longer relevant. Your equity is it's resale value after costs less your loan.


    Say it did sell for £325,000, then your sale statement would look like this:


    Sale £325,000
    less
    Agents Fees £3,900 (1% plus VAT)
    Legal Fees £1,000
    Moving Costs say £1,000
    Mortgage Redemption £68,000


    Balance £251,100


    You may be able to borrow up to 4.5x income especially as you have a decent income. You won't be able to not get a mortgage as you get older, it's just the term shortens as lenders want you paid up by retirement. Many lenders go to 70 now. I'm 59 and have just taken out a 10 year mortgage. You will be fine with 25 years or more.


    You should be able to borrow £250k, especially since your loan to value (LTV) will be less than 60%. So your purchase budget would be something like this:


    Proceeds from sale £251,100. Retention for "rainy day" £10,000, balance £241,100


    Purchase Price £475,000
    Deposit £241,100
    Mortgage £250,000
    Stamp Duty £13,750
    Legals £1,000
    Sundries £1,350 (new bits furniture for upsize)


    Total Purchase Costs £491,100 with mortgage of 53% LTV.


    You're a bit short for a £550k purchase I'm afraid.
    Last edited by Mutton Geoff; 03-10-2017 at 5:18 PM.
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    • Ithaca
    • By Ithaca 3rd Oct 17, 2:44 PM
    • 217 Posts
    • 232 Thanks
    Ithaca
    We re-mortgaged on a 30+yr term at age 37 (which will put us well past 64 by the time it's paid off). No problem at all, and no apparent penalty in terms of available rates etc.

    In terms of the mortgage lending the 4 x salary is a guideline but many lenders will now work on affordability (i.e. someone earning £3500/month with £2000 worth of monthly loan commitments may not be able to borrow as much as someone earning £3000/month with no loans or credit etc).
    • Crashy Time
    • By Crashy Time 4th Oct 17, 1:14 PM
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    Crashy Time
    When a buyer has paid you is the time to figure out what you can or cannot afford IMO.
    • hazyjo
    • By hazyjo 4th Oct 17, 1:17 PM
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    hazyjo
    When a buyer has paid you is the time to figure out what you can or cannot afford IMO.
    Originally posted by Crashy Time
    Not really, no. You'd be homeless. Sell and buy together, unless there's a reason why you can't.
    2017 wins: Opera tickets; film preview; lipstick; Ideal Home Show tickets + afternoon tea & bottle of Champagne; 2 cases of NKD; notebook; bath rack; books; film Premiere; Broadchurch DVDs; lipbalms; hamper (food/wine/Echo Dot/Jo Malone goodies); Avon lippies; cowhide rug; Windsor luxury break, foundation; Flybe flight
    • Crashy Time
    • By Crashy Time 4th Oct 17, 1:23 PM
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    Crashy Time
    Not really, no. You'd be homeless. Sell and buy together, unless there's a reason why you can't.
    Originally posted by hazyjo

    What I meant was don`t just assume you will get a certain price. IMO many people would be better to stay put unless they really need to move now, because the stress of finding a buyer at a price they like just isn`t worth it.
    • hazyjo
    • By hazyjo 4th Oct 17, 1:57 PM
    • 9,624 Posts
    • 12,139 Thanks
    hazyjo
    What I meant was don`t just assume you will get a certain price. IMO many people would be better to stay put unless they really need to move now, because the stress of finding a buyer at a price they like just isn`t worth it.
    Originally posted by Crashy Time
    Not getting into a price crash debate, but wanted to add it entirely depends on the area, demand, etc. Your statement will always apply to some areas, even in a booming property market!


    If the market is falling in their area, it can be a good time to buy if they have enough equity and/or savings. Done it myself - always worked out to my benefit in the long run.
    2017 wins: Opera tickets; film preview; lipstick; Ideal Home Show tickets + afternoon tea & bottle of Champagne; 2 cases of NKD; notebook; bath rack; books; film Premiere; Broadchurch DVDs; lipbalms; hamper (food/wine/Echo Dot/Jo Malone goodies); Avon lippies; cowhide rug; Windsor luxury break, foundation; Flybe flight
    • Crashy Time
    • By Crashy Time 4th Oct 17, 2:23 PM
    • 5,008 Posts
    • 2,157 Thanks
    Crashy Time
    Not getting into a price crash debate, but wanted to add it entirely depends on the area, demand, etc. Your statement will always apply to some areas, even in a booming property market!


    If the market is falling in their area, it can be a good time to buy if they have enough equity and/or savings. Done it myself - always worked out to my benefit in the long run.
    Originally posted by hazyjo

    No, I don`t agree, in the heyday of the boom (bubble) most people could assume they would get offers over their daft asking price, or at least get their asking price IME. That is what bubbles (Ponzi schemes) do, they distort people`s idea of value.
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