New mortgage, but what happens to the old one?

pbryd

I have a flat with a mortgage, If I wanted to sell my flat and buy a house then how is the new mortgage worked out, borrow amount, equity, deposit etc?

Current Flat
Est value 70K
Mortgage 14K (14 years left on lifetime tracker)
Equity 56K approx.


If I look at houses for around 120K, how is the new mortgage, equity etc usually worked out?

Would I still be needing a cash deposit for the new mortgage, would I be better off saving a cash deposit or overpaying the current mortage to clear it as much as possible?

beecher2

You would use the 56k equity to pay for fees and put towards a deposit of say 52k. If your present mortgage is portable, you'd possibly port the 14k and get a further mortgage for the remaining 64k, if your salary and credit file is ok. If your lifetime tracker is at a good rate you might be better saving to add to your deposit.

pbryd

Thanks beecher.

I'm just doing some 'what if' thinking at the moment. My tracker is very good atm but I'm only working part-time while studying part-time so I can't afford to pay much towards overpayments.

Having said that, from reading these boards I'd be better off saving what I can to pay any future possible deposit, while the tracker rate is so low.

Phil

dimbo61

If you are only working part time and your mortgage rate is very low then you are much better off building up a good emergency fund in cash ISA,s earning a better rate than your mortgage rate.
this money could then be used to pay fees, surveys, solictors etc when you do decide to move GOOD LUCK

pbryd

Thanks dimbo61, I have around 5k in ISA index trackers and bank accounts so I'm feeling pretty secure while I'm training.

Ofcourse I can't spend any of it because I don't know when I'll be able to replace it lol.

I'm thinking... in a year or two I'll finish training, the economy and job prospects should be better and I'll start full time work again.

So I'm trying the make do with what I have and get myself in the best possible position, whether it be moving or having a loft conversion on the flat.

Either way, it seems that saving a chunk of cash is the best option, considering I have only 400 quid worth of credit card debt @ 0%.