Basic Remortaging Question

alexlyne

Hello

I have been searching on the net for an answer to this seemingly simple question, but not found anything. I am hoping one of you wonderful lot can help with this.

I am currently in Year 3 of a 5 year fixed mortgage. And glad of that too. I am in a 2bed terrace which cost 88k, of which 10% was paid as a deposit.

In the next year, my girlfriend (who moved in with me after I bought the house) and I plan to move closer to my new job, and upsize to a 3bed semi or something similar. I expect that we will have to pay around 150k or so (Bristol area).

My question is can I use any profit I make when selling my house as a deposit for a new house? My mortgage is currently stands at 71K, and 74K if I cash in early. Therefore, even if I can sell my house for the same as I bought it, I should gain around 14K. I would hope to make a little more than this, as I spent 5K redoing the kitchen, and also they have started building a bypass around the village, and the main road on which the house is situated will become a cul-de-sac.

I am hoping that by next summer, more market fluidity and low house prices mean we can get a good deal then...
I wish I could say we could save up more before then too, but we have a wedding to save for which is the end of next year.

Back to the question: Can I use any profit I make when selling my house as a deposit for a new house?

Thanks

Alex

Airwolf1

Yes, the difference in value could count towards putting to the house, however, prices are continuing to drop, and next year they will be lower still, so be aware.

Gangstabird

You should also check if your mortgage is portable.

alexlyne

Had a hunt of my mortgage information, and have found that the mortgage IS portable.

This, as I understand, means then that If we were to move into a 150K house:

The money from the sale of our current house (expected to be at least 80K I hope) will go directly towards funding the new house.
The current mortgage will continue to run it's course.
We will get a new additional mortgage for the remaining value. But this will most likely have to be from the original lender?

Sooo... I think I'm now a bit confused. This may or may not be accurate:

We subsidise new house with sale of old house. 150K-80K = 70K left to pay.
I still have a mortgage for 71K, which continues to be paid into separately.
The remaining 70K left to pay on the new house is a different mortgage (in me and my future wife's name), and as long as her income + my income (excluding the fact I have to pay the old mortgage too) allows a 70K loan, then all is OK?

Now going beyond this:
If we get a 70K mortgage on a 150K house, this is a sub 50% LTV. Does this mean we can get a much better rate? or am I being silly by not taking the 1st mortgage into account?

I'd appreciate it if anyone can confirm or deny the above - and keep me on the path of correct knowledge!

Thanks
Alex

PasturesNew

Your LTV is based on BOTH mortgages together (71+70), so £141k of £150k - which is a LTV of 94%. You'd need more deposit from savings.

alexlyne

Ahh, Ok Thank you - this does make some sort of sense.

Now I gotta tell the future missus that we can't get married yet.. !