better to overpay current mortgage or save for deposit on next house?

misspenny

well the title says it all really after having my daughter 3 weeks ago i have realised that with a baby + a toddler our 2 bed house is tiny and really really lacking outside space. so we are looking to move some where bigger. we had to remortgage last jan - very bad time to have done it but we had no choice and due to very high % ltv we ended up on 5.5 % fixed for 2 years, which we are stuck with tiil next jan and who really know what interest rates will be like at the end of the 2 years. its going to be at least a year befor we start seriously doing anything about moving, and our income has dropped while im on mat leave so not a lots of spare pennies to put anywhere, i also have it in the back of my mind to have all the fees needed to move saved up befor putting house on market.

i think your all going to tell me over paying is the way to go

misspenny
(sorry for the naff typeing/spelling feeding said 3 week old with one hand and typing with the other)

Lynn11

I will be interested in any other replies you get as we will need to move in the future as we also have a 2 bed - hopefully 2010 or 2011 at a push so we can increase our family with another child. At the moment I am overpaying most £250 a month plus a bit extra when I have this but also putting double this amount into savings, hopefully to help with fees, removal costs and hopefully more deposit of £10,000 so that we are only increasing our borrowing by £20-£30,000. Thats my plan but we will see what happens as it all depends on the housing market since hubbie works with them so he does not wish to move when his job could be still iffy.

StuartGMC

Yes do have saved the monies for fees, the last thing you want to happen is to add them to the mortgage and pay interest on them too :eek:

Do think about funds likely to be needed initially to replace carpets, redecorate (children's rooms?) etc plus anything else that may happen at the time (fridge or freezer failure..)

In essence what you are looking at is a bit like buying a car with a p/x and cash deal; it doesn't matter what the car price is and the trade-in on the p/x it is the "price to change" which is important i.e. the cash you have to add (or in the case of housing, the additional mortgage requirements).**

So provided you have adequate additional funds as above, whether you've OP on the present mortgage (so it is lower) or you have more cash to out down in deposit, your new net mortgage requirement will be the same.

**Note: Of course if you are in negative equity then you will need to pay in to reduce this so the lender will allow you to move, I believe.

HTH?