Question on buying selling "profit" or trading "down"

Patr100

After about 15 years now I may soon decide to move on.
Now something occurred to me that I need to clairfy . Seems obvious but hadn't really thought about it til now.
Original mortgage value is much less than value of house so there is plenty equity.

But one thing I'm suddenly not sure of . If I sell and buy and say the new property costs 5k less that what I sell my current home for -
Where does the 5k profit go ? Do I get to pocket that after completion or do the mortgage Co somehow still hold on to it?

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rsykes2000

You sell your house and your solicitor receives money which they give the mortgage company their share, take their fees from and give the remainder to you.
You then buy a house using this money and a mortgage if necessary. You get to keep any money that you haven't spent on the new house.

Milliewilly

You get any profit from the sale of your house (if there is any) once the remainder of your mortgage is paid off. Your solicitor will do this for you on completion and at the same time deduct their fees and usually pay the estate agent fee for the sale of your house.

If you ring up your mortgage provider and ask for a redemption statement this is roughly the amount you will have to give back to the mortgage lender depending on the time taken between asking for the redemption statement and paying it off minus any redemption penalties.

So find out how much you think you can get for your house, minus what you will have to pay in fees to the solicitor/ Estate agent / Removal company / mortgage lender etc and this will leave the balance of whats yours to spend on another property.

Patr100

So as i expected their share is just the value of the sold house - plus of course , fees etc .
As I say it seems obvious but I thought I might have missed something having only recently dealt with a relative's home that had no mortgage.

tek-monkey

Their share is the outstanding value of your mortgage, not the value of the house.

Patr100

tek-monkey wrote: »

Their share is the outstanding value of your mortgage, not the value of the house.

Yes. but unless I took out another mortgage , or paid off the existing one , I couldn't access the equity or the difference between my mortgage value and current higher value of property.

Doozergirl

Think of it as two separate transactions. After all, that is what it is.

You sell your house. Your solicitor pays your mortgage company whatever is owing on the mortgage, they pay your EA and they pay themselves. What is left is your money. Cash.

If you buy another house then you consider how to buy that house. Are you going to take out a new mortgage to buy it? If so, you decide how much of a deposit you want to put down on the house. If your deposit is less than the change from your house sale then of course you can access that money.