Upsizing & mortgage

sg0102

Hi there

I'm after what I anticipate will be relatively simple advice.

We are currently in out first home having become first time buyers 3 years ago. We bought at the height of the Market, with less than 5% deposit on a 30 year mortgage.

We have recently had a little baby and are seeking somewhere bigger. I don't really understand how mortgages work. Wanting a bigger house brings with it a bigger mortgage, but would we be able to start our mortgage term again at 30 years or should it be 27 years. What do people generally do when buying bigger houses?

Our income has increases significantly over the last 3 years so we are able to afford a larger mortgage (deposit is another issue!!).

Any advice greatly appreciated

Steve

Halitosis

You can arrange your new mortgage for whatever duration suits you - start again at 30 years if you wish, although age may be against you if that takes you beyond your 65th birthday (when most mortgage providers assume you will retire). Shop around, and use a broker. HSBC are offering some great deals. Remember though, interest rates can (and will) only be heading in one direction!

GMS

Buying at the height of the market with a 5% deposit probably means you are in negative equity.

You would need to know what you owe and what it is worth. You would also need a deposit of at least 10% for the new place.

No deposit, no new house

sg0102

Thanks for the replies.

I dont think we are in negative equity. We are in a decent area, and house prices seem to have held their own (jusdging by what else is on the market around us), and we have been overpaying the mortgage by £250 a month for the past 18months, so should be ok.

Just turned 30, so should be ok!

Thanks
Steve

beecher2

Judge by how much houses sell for, rather than what they're on sale for. Everyone seems to think their area has bucked the trend, but unless you have a very small mortgage, overpaying by £4500 when you only had a 5% deposit and have a 30 year term (so will have paid off very little capital after 3 years) is likely to be a drop in the ocean.

sg0102

Thanks for the scaremongering beecher. Not really relevant to my question.

ViolaLass

sg0102 wrote: »

Thanks for the scaremongering beecher. Not really relevant to my question.

Very relevant to your question, actually. As GMS said, no deposit, no new house.

beecher2

sg0102 wrote: »

Thanks for the scaremongering beecher. Not really relevant to my question.

I'm not scaremongering at all - just being realistic. If you don't have at least a 10% deposit, moving isn't an option. You 'think' you 'should' be ok but isn't it better to find out for certain now, rather than once you've set your heart on being able to move?

Trying_to_be_good

When you buy a new house, you'll need enough funds to
1. Repay the outstanding mortgage on the old house
2. Pay the selling fees, including estate agent and legal fees
3. Have a deposit of at least 10% of the purchase price of the new house
4. Pay the buying fees including legal fees, mortgage fees, survey costs and any stamp duty
5. Sort out removals, be it hiring a van or paying for full removals.

You'll need upfront savings as well as equity in your old house, if all that's sorted, good luck on finding the right house for you and your family. :-)

Thrugelmir

sg0102 wrote: »

Thanks for the scaremongering beecher. Not really relevant to my question.

You'll need to find a 10% deposit to exchange contracts on the new property. So built up equity in your existing property is very important.

sg0102

I suppose my point is I'd prefer advice on the new mortgage side of things rather than questioning if I can move in the first place.

For the record, we bought house for £192k and have outstanding mortgage of £174k. Houses on the street are on the Market for £200k, hence my belief that negative equity shouldn't be an issue.