Getting a bigger mortgage for a new house...

thebunny99

I do apologise if this is a silly question but despite having a mortgage at present I remain fairly clueless on how they all work.
Having understood the process of buying a house and obtaining my mortgage I am now looking to sell my house and upgrade to a larger house.

What I am getting very confused about it how to work out an estimation of the mortgage I will be able to afford and therefore the price bracket in which I can be realistically looking for my next home.
When I purchased my current house I had a deposit of £50,000 and the property cost £141,000 so I had a mortgage of £91,000.

So, if for example I sold this house for the same amount of £141,000 what happens with this? Does this pay back the remainder of my existing mortgage giving me the £50k deposit again for the next house or am I getting this all totally wrong?

I am now earning more than I was when I orginally applied for my first mortgage so hope this will allow me to borrow more but at the moment I'm a bit stumped....

DVardysShadow

Work out the new mortgage you could get and subtract the amount owing on the mortgage you have. This is the extra you can afford. Add this to the amount you expect to get for your present house. This is the amount you can pay for the next house - approximately.

If you have savings you want to put to the house, add these to the amount for the next house - or if you want to pay off loans, subtract this.

And finally, subtract

• Estate Agent Fees
• Solicitor Fees for buying and selling
• Stamp duty
• removal costs

dimbo61

You are right the equity in your first property can be used as a deposit for your next property.
Now the thing to look at is LTV and how much you can afford to pay for the next place
If you pay over £250K then you get hit with 3% stamp duty (tax) and to get a good deal the bigger deposit the better.
lots of good deals with a LTv below 75% so with a £50K deposit then getting a place under £200K gives you a LTV of 75% BUT the lenders are being more carefull and you need to speak to your current lender to get an idea of what they will lend you.

ali-t

most of the banks have a 'how much can I borrow' calculator on their websites that you put in your salary, any debt repayments, the deposit you have and they will tell you roughly how much you could borrow.

thebunny99

Thanks guys, I do have a meeting set up with my current lender next week to discuss this. I just wanted to try and get a better understanding of things prior to this.
I have had a look at mortgage calculators on a few bank websites and these seem to vary quite signifincantly, just to add to my confusion!