second time buyer, unsure of system

anskills

hi, i bought my first house over a year ago for £46k, it has now been valued about £55k. i hope to buy a second house in the near future for £75k. basically im not sure how the system works when buying and selling and whether those figures tie up and how much ill have to put up front etc.

i currently earn £21k a year so reckon i could get a mortgage for £63k. i will have made hopefully about £10k on my first property so does this mean they would let me have mortgage for £73k and i would have to stump up only £2k to meet the £75k buying price of the 2nd property.... plus buying and selling fee's?

at the current rates what would that be roughly on a fixed rate mortgage, about £400 a month?

any advice would be appreciated, thanks

Doozergirl

It doesn't really work like that, you should be putting your 'profit' back into your next house. You don't say how big your mortgage is now. To try to put it simply, the difference between your £55k house and the next house for £75k is £20,000. You will have to add this £20k to the amount you owe on your present house. That is how much you will need to borrow....

PLUS you have to pay out agents fees for selling, solicitor's buying and selling fees, searches, surveys and mortgage arrangement fees on your next property. If your present mortgage is less than 2 years old, you may well have a penalty to pay. All of this is going to take a hefty sum out of your £9k profit. A good £2,500 without considering any mortgage penalty.

Best thing to do is to ask your mortgage company for a redemption amount and take it to an Independant Mortgage Advisor who will take you through the process, explain properly(!) and find you the best mortgage deal for your circumstances. 99% says you will not get the cheapest deal through your own bank,so go straight to an Independent, please! Find one at https://www.unbiased.co.uk

anskills

my mortgage currently is for 95% of £46k which is about £43k, if i remember correctly and is about year and half old, i have been told it is portable and already have a very good mortgage advisor and am aware about the fee's needing paid.

basically the bit im unsure about is how much i will get to spend on a next house....... assuming i get £55k for my house. what is the maximum they will give me to spend on another house, bearing in mind ill have made £9k on my house, have an excellent credit rating and my earnings are £21k. also bearing in mind that i didnt go anywhere near my upper limit when buying this house for £46k, i probably could have gotten 3 times salary = £60k

im looking at houses and flats at the moment but really am not sure how much i may to spend and subsequently how much of a loan i may need to take me up to the £75k i may need for this house

AndrewSmith

Hi,

Some lenders will insist that all the equity from your sale is used for deposit and fees associated with your new purchase, others will not. It depends where you go.

Possible fees and approximate costs: (please remember these are approximations)

Estate agents fees (assuming 1.5%) £825.00 + VAT
Solicitors fees (for sale & Purchase) £700.00 + VAT & Disbursements (which could add approx £200 to this)
Land registry / searches £200.00
Stamp Duty £ NIL
Mortgage Valuation £250.00
Mortgage Arrangement fee £499.00
Current mortgage exit fees £150.00
Total £3091.00 (inclusive of VAT where applicable).

Also allow for moving costs and a contingency for emergencies such as boiler problems etc.

Basically a second time purchase works in very much the same way as a first time, except that the deposit and fees will hopefully be contributed to from the equity in the place you are selling.

Eg: (I dont know what your current mortgage is so I will assume approx 42,000)

You sell for £55,000
Mortgage £42,000
Equity £13,000
Less fees £3091 (based on the above figures)

Deposit £9909

Purchase Price £75,000
Less Deposit £9,909
Mortgage needed £65,091

With a Salary of £21,000 (assuming you have no other loans or credit card payments, and have had no credit problems in the past) a mortgage of £65,091 should be very achievable.

Let me know the accuracy of the assumptions I have made.

Hope this helps

Andy

anskills

AndrewSmith wrote:

Eg: (I dont know what your current mortgage is so I will assume approx 42,000)

You sell for £55,000
Mortgage £42,000
Equity £13,000
Less fees £3091 (based on the above figures)

Deposit £9909

Purchase Price £75,000
Less Deposit £9,909
Mortgage needed £65,091

With a Salary of £21,000 (assuming you have no other loans or credit card payments, and have had no credit problems in the past) a mortgage of £65,091 should be very achievable.

Let me know the accuracy of the assumptions I have made.

Hope this helps

Andy

ive had a quote for buying and selling and its in scotland so solicitors/estate agent fee's are all in one but it would certainly be about £2-£3k in total.

that is the info i require exactly and kind of along the lines that i was thinking, thanks. i now at least know that i can be looking at houses that may go for early £70k's. i would obviously check with my IFA and lender before making assumptions but i at least understand how it works now.

AndrewSmith

My Pleasure

Glad to help.

Andy