New to mortgages - large deposit but no cash!

debtfreesomeday

Hello

I would appreciate it if someone could help me with a few mortgage related questions if they are able to. This is our situation:

We are considering buying a new build house which is priced at £220K.
We currently have a house that is mortgage free (my parents very kindly and generously purchased this for us) and the builders will give us £180K for our house in part exchange (which is about what it's worth anyway). So, we would need to get a mortgage for £40K to cover the difference.

We have no cash savings as we have been working hard over the past 18 months to become debt free. We have £15K left in an outstanding loan which we are currently overpaying.

My questions are, are we able to get extra in a mortgage to cover the 15k loan and pay that off as well as we don't want to be paying out both monthly?

Also, we have no cash readily available for solicitors fees, stamp duty and the costs associated with buying a house (no fees on selling property as a part exchange). Are we able to cover these within the mortgage or do we need to pay for these up front?

Sorry if these are silly questions, but as we've never had a mortgage before we are unaware of the procedures. Thank you.

shayward

You should be able to add all these fees onto your mortgage. At least that is what we did when we bought a house a few years ago.

You should be able to get as big a mortgage on the new house as your bank is willing to give you. For the best rates no more than 60% of the value, but you could go right up to 90%.

debtfreesomeday

Thanks Shayward.

We're looking at getting a mortgage of £40k + 15K to cover our loans, so £65K + whatever we'll need to cover fees, unless we can save the fees in the next few months which may be achievable.

de1amo

might be best to look about on building societies sites for mortgage affordability calculators--they take in lots of the variables and give you a starting point-first direct has a good one

Jonbvn

debtfreesomeday wrote: »

Thanks Shayward.

We're looking at getting a mortgage of £40k + 15K to cover our loans, so £65K.

Trying not to be pedantic, but I think you will find that you need 55k.

getmore4less

Whats your income?

I would be a bit concered if you are going to struggle with existing debt and £40k mortgage(+ expences).

You need to fix your spends issues before you consolidate.

Why the loans?

debtfreesomeday

My mistake 55k.


We will not struggle with a 40K mortgage & existing loans, but we are trying to put ourselves in the best possible financial position we can before committing to a mortgage for 15+ years.

We do not have 'spend' issues - we have worked very hard to more than halve our total debt within the past 18 months and are continuing to do so. The loans are existing loans from years ago when we were not so savvy - one was a car purchase when ours conked out suddenly and we had no savings to cover it, the other was hubby's loan before we met.

Conrad

As a safeguard you might want to get a mortgage approved in principle before going any further. Having a large sum of equity helps, but it's still relatively hard to get a mortgage just now.

Good luck

powerwin

debtfreesomeday wrote: »

and the builders will give us £180K for our house in part exchange (which is about what it's worth anyway). So, we would need to get a mortgage for £40K to cover the difference.

If you can get more than £180k by selling your house on the open market, then why not do that?

Rgds

debtfreesomeday

It is currently worth about £180k so they are offering market value price.