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Buying a cheaper house then current mortgage

angeljay
angeljay Posts: 202 Forumite
Part of the Furniture Combo Breaker
in House buying, renting & selling
Hi,

Just trying to work out a few things, i currently have a joint mortgage with my ex for 98K I have applied to bank to have mortgage put in my own name but they wont unless i can lower mortgage to 70K. If i could sell my house and buy a cheaper house for 70K transferring the mortgage from the bank to the new house would i need a deposit?

Thanks

Comments

  • Doozergirl
    Doozergirl Posts: 34,078 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    Yes you would. Whatever that mortgage product demanded.
    Everything that is supposed to be in heaven is already here on earth.
  • angeljay
    angeljay Posts: 202 Forumite
    Part of the Furniture Combo Breaker
    I dont understand why thought as I am just lowering the amount on the mortgage which I am currently paying I am not remortgaging just moving to a new home? I am confused with this because the bank would recieve about 20K back towards the mortgage from the possible house sale that I am in at present.
  • _Andy_
    _Andy_ Posts: 11,150 Forumite
    angeljay wrote: »
    I dont understand why thought as I am just lowering the amount on the mortgage which I am currently paying I am not remortgaging just moving to a new home? I am confused with this because the bank would recieve about 20K back towards the mortgage from the possible house sale that I am in at present.

    Because the bank hardly has any security in the property - i.e. there would be no equity and house prices are still falling.
    As per the previous poster, you will need a deposit.
  • QTPie
    QTPie Posts: 1,373 Forumite
    If you sell your house and have equity in it, then you can use that as the deposit...

    Say you sell your house for £130k, byt the time you have settled fees etc, you have maybe £128k left. You repay the mortgage on that home when you sell (OR they allow you to port £70k of that mortgage across to you new house). You would have about £30k left over from the house sale (i.e. the proceeds of the house minus the "repayed" mortgage). That £30k could be then used as the "deposit" on your new house...

    So, it depends how much equity you have in the house. Plus also your arrangements with your ex - would your ex be entitled to any of the proceeds from the sale of the house?

    QT
  • neas
    neas Posts: 3,801 Forumite
    the reason they want it at 70k ish is so you have equity.. in the house.

    If you sold the house got 98k back... then you would have 0 money... buying a 70k house would still mean you have 0% equity... its all about pecentage.
  • silvercar
    silvercar Posts: 49,766 Ambassador
    Part of the Furniture 10,000 Posts Academoney Grad Name Dropper
    If your lender is currently giving a maximum loan to value (LTV) of 90% then they would require you to have a 7k deposit on a property worth 70k. If your mortgage is portable, you could move 63k to the 70k property to keep within the 90% rule and repay 7k of it.
    I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
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