Idiot's guide to how selling and moving works please...

joeyvicks

hello folks, newbie when it comes to selling and moving house so looking for some info please.
Just dont know how it works with a new mortgage when you sell a house then move. Eg we bought ours for £150k... we've been in it just over a year and if we were to sell and buy a house for £200k how does it work with deposits for new house etc and also any money that is made on the property over and above what you initially had bought it for

Evilm

There are couple of ways you can do it (assuming you need extra funds on the mortgage):

Porting : If your mortgage is suitable you can ask to "port" the existing lending to keep your rate on the amount already owed. Then you get the extra funds you need on the mortgage at a new rate and effectively have 2 mortgage funds at two different rates.

A new mortgage: You arrange a new mortgage and the old one is paid off. You get a completely new deal and are not locked to your current provider.

Your current equity and any more funds you put into it get used as your "deposit" as far as the mortgage equity on the new house is concerned. Remember you need to take into account if your salaries would support the higher mortgage amount and allow for the fees (estate agents, solicitors, stamp duty etc).

iamana1ias

joeyvicks wrote: »

hello folks, newbie when it comes to selling and moving house so looking for some info please.
Just dont know how it works with a new mortgage when you sell a house then move. Eg we bought ours for £150k... we've been in it just over a year and if we were to sell and buy a house for £200k how does it work with deposits for new house etc and also any money that is made on the property over and above what you initially had bought it for

If you only bought a year ago you've wasted thousands. Odds are your house is worth less than you paid for it, there is probably an early repayment charge of a few £k on your mortgage and you're looking at several £k in costs for solicitors, estate agents, stamp duty etc. Not a clever financial strategy at all.

joeyvicks

not looking at the moment just planning for the future really and trying to get my head round everything. If we sell in around 3/4 years do you think that would work out better?

iamana1ias

If we had the ability to know what would happen in years to come we'd all be millionaires

firstaspect

Usually the original mortgage gets paid off by taking out a new mortgage on the place you're buying using whatever equity was in the place you're buying as a deposit.
So if you have a 150k house with say a 100k mortgage on it then you have 50k equity. If you then buy a new place for 200k you'd need a 150k mortgage using the 50k as deposit.
You'd then need a good few thousand to cover Estate Agent fees, solicitors and potentially stamp duty.

MobileSaver

It all revolves around how much 'equity' you have in your house when you come to move.

Equity is the value of the house at a given moment in time less any loans (e.g. mortgage) secured against it. So, to give you a rough idea, how much is your house worth today and how much is your outstanding mortgage?

The deposit for your next house will be the equity in your current house plus whatever other savings you have stashed away in your bank.