Mortgage Balance v Repayment Figure

manabootadug

Hi,

I tend to get a mental block when it comes to Mortgages so any help here would be appreciated.

This might seem simple to some folk but here goes....

Thinking of buying a house at £100,000........
My house is worth circa £97,000 to £100,000.....
My current mortgage balance is £88,410 with 25 years to go

Does this mean I have at most £11,590 equity? If so can I use this £11,590 to reduce my loan to value on my new home?

Or

Is the balance of £88,410 different from a repayment figure....possibly meaning more equity?

Okay.... after you've stopped :rotfl:some help would be good!!!!

Radiantsoul

A redemption figure is the amount you need to pay to repay the mortgage in full. It will generally be a bit higher than the amount of the outstanding mortgage because of various fees and any interest that needs to be added between the statement date and the redemption date.

manabootadug

Okay...i guess i'm not being thick afterall. No-one seems to know the answer?:T

blakea8k

you have been given the answer

beecher2

Your equity will be the amount left after you've paid off your mortgage, and paid the associated fees involved. You're not going to have the minimum deposit of 10% which you will need without having further savings.

JimmyTheWig

The first question is whether you are in a period where you have redemption penalties on your mortgage. E.g. if you are currently in a fixed rate or discount period then it is likely that you will have to pay a good few thousand on top of the £88k to "redeem" (i.e. pay off) the mortgage.
If that's not the case then all you'd have to pay to clear the mortgage is an exit fee, which should only be hundreds.

However, if your mortgage is "portable" (I believe most are, though I don't really understand the limitations of this) you should be able to keep your existing mortgage with the new property and not pay any mortgage fees.

Importantly, though, you need to remember the costs of buying, selling and moving. You will pay stamp duty on the place you buy, depending on its value. You will pay estate agents fees on the place you sell. You will pay solicitors fees for both the buying and selling. You will pay removal costs, unless you can do it yourself.
In total you are looking at a good few thousand.
If you don't have the savings to pay for these costs, you don't really have the equity in your house to add them on to the mortgage.

manabootadug

Hi

Thanks for a really helpful reply!

Quote: The first question is whether you are in a period where you have redemption penalties on your mortgage?
Answer: My existing deal runs out on the 31st of May, so after that, i'm free of charges.

Quote:However, if your mortgage is "portable" (I believe most are, though I don't really understand the limitations of this) you should be able to keep your existing mortgage with the new property and not pay any mortgage fees?
Answer: Yes it is and I've done this before, a few years back.

With regards to other costs.....yes i remeber it costing about 2-3k to move the last time. But no stamp duty (new house will be £100k)!

Not sure how easy it is to cut out the estate agent and do this through self selling sites??????

Radiantsoul

The redemption figure is nothing to do with stamp duty, removal fees or etc. It is the amount you have to pay to the mortgage or building society to release and repay in full their mortgage.

JimmyTheWig

manabootadug wrote: »

Not sure how easy it is to cut out the estate agent and do this through self selling sites??????

Personally I wouldn't have the guts to do this. But up to you, I guess.