Moving home - question on how it works

ashe

Hi,

I currently have a mortgage on a property which I bought in 2006 Q3 which will therefore have lost some of its value. I paid £80,000 for it back then. I have seen a house in a nearby area that I would be interested in moving to priced at £85,000.

As I already have a mortgage I am not too sure how it works...do I;

1) need to come up with the difference in price in cash?

2) take out a new mortgage for the difference between the value/sale price of my current property

3) how do deposits work? LTV? is this as much of a problem as with FTB as when i purchased this it was 95% LTV; will I be likely to stump up additional cash to reach a certain LTV?

Fire_Fox

Are you intending to sell or hold onto the first house? What is its current value going on land registry sold prices for the street? You will need a 10% minimum deposit on the second property, this is after the outstanding amount on the mortgage has been settled, estate agent and solicitor has been paid. Sounds to me like the first house is in negative equity if you borrowed 95% and the market has fallen, when you sell it you will usually pay off the old mortgage and start from scratch with a new one (although some mortgages are portable). If so you will need to find the new deposit and pay off the estate agent and solicitor out of your own pocket. If you are unable to save up for a deposit then you cannot afford to be a homeowner in that price bracket.

ashe

Hi,

Thanks for response - I am intending to sell current house. Nationwides house price estimator suggests that for my area the house would be worth £76,000. Looking at my most recent mortgage statement my current balance is £70,000. I have a few expensive assets and shares that I can liquidate, its more the process I am enquiring on rather than the affordability as in does my equity (assumuing it matches up in valuation) count as a deposit, for moving with an existing mortgage is it similar LTV ratios as FTB or is it different as you are an existing borrower? From the sounds of what you've said its the same, but just wanted to clarify.

timmyt

ashe wrote: »

Hi,

I currently have a mortgage on a property which I bought in 2006 Q3 which will therefore have lost some of its value. I paid £80,000 for it back then. I have seen a house in a nearby area that I would be interested in moving to priced at £85,000.

As I already have a mortgage I am not too sure how it works...do I;

1) need to come up with the difference in price in cash? of course if you are buying for more as you cant get 100% mortgages these days

2) take out a new mortgage for the difference between the value/sale price of my current property you can't get a 100% mortgage and your existing will have to be repaid only to get a fresh and higher mortgage for your new one

3) how do deposits work? LTV? is this as much of a problem as with FTB as when i purchased this it was 95% LTV; will I be likely to stump up additional cash to reach a certain LTV?

see in red

Fire_Fox

I wasn't asking about affordability as such, I will try to explain in a clear way and having figures really helps! If you sell for £76K out of that your solicitor will pay back your old mortgage of £70K, your estate agent (say 1%) at £7.6K, his own fees at £1K. Basically you have no equity. Then if you then buy a house for £85K you will need £8.5K for a deposit, £500 legal fees, then you need to borrow £76.5K on a brand new mortgage. You need to find £11.6K cash and add £6.5K to your mortgage.

Alternatively some lenders will let you port your mortgage, in that case you may need to 'top up' the deposit to 10% - the bank has £6K of equity so you need to add another £2.5K cash and borrow the rest of the difference on the mortgage. However this does not deal with the issue of the estate agent who will invoice you £7.6K and your solicitor who will invoice you £1.5K. You still need to find £11.6K cash and add £6.5K to your mortgage.

timmyt

Fire_Fox wrote: »

I wasn't asking about affordability as such, I will try to explain in a clear way and having figures really helps! If you sell for £76K out of that your solicitor will pay back your old mortgage of £70K, your estate agent (say 1%) at £7.6K, his own fees at £1K. Basically you have no equity. Then if you then buy a house for £85K you will need £8.5K for a deposit, £500 legal fees, then you need to borrow £76.5K on a brand new mortgage. You need to find £11.6K cash and add £6.5K to your mortgage.

Alternatively some lenders will let you port your mortgage, in that case you may need to 'top up' the deposit to 10% - the bank has £6K of equity so you need to add another £2.5K cash and borrow the rest of the difference on the mortgage. However this does not deal with the issue of the estate agent who will invoice you £7.6K and your solicitor who will invoice you £1.5K. You still need to find £11.6K cash and add £6.5K to your mortgage.

not sure what that means. Porting just means you keep the same internal bank product, but the mortgage still has to be repaid by the selling lawyer, only to receive the same amount back again.

G_M

timmyt wrote: »

not sure what that means. Porting just means you keep the same internal bank product, but the mortgage still has to be repaid by the selling lawyer, only to receive the same amount back again.

:T So you do know what porting means! :T

Richard_Webster

£76K out of that your solicitor will pay back your old mortgage of £70K, your estate agent (say 1%) at £7.6K, his own fees at £1K

Errr.......1% of £76K is £760, call it £1K not £7.6K so OP does have some equity - around £5K.

He will probably find that the most his lender will lend will be 90% (and might be less)(i.e. £72K) so he will have to find £80K price-£72K mortgage = £8K balance of price - £5k from sale = £3K to find to buy plus solicitors' costs and cost of removals.