Upsizing & mortgage

blueberrypie

sg0102 wrote: »

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.

The likelihood of getting a new mortgage is going to have a pretty big impact on whether you can move - the two aren't separate questions.

What houses around you are on the market for isn't relevant - what they are *selling* for is more important. Unless those houses are selling for the asking price within days of going on the market, those marketing prices are meaningless.

But even assuming they are *selling* at £200k, you would need at least £20k as a deposit on another property *at the same price*. As you want to upsize, you're going to need more than £20k. And as has been mentioned, you'll also need money for fees, moving costs, etc.

If you are looking at a new property costing £250k, you'll need a deposit of at least £25k - which pretty much wipes out any profit even if you do manage to sell at £200k.

That's the reality when it comes to the mortgage side of things. To get a new mortgage, you'll need at least 10% of the value of the new property (as assessed by the lender - quite possibly less than you offer for it). The amount you sell your current property for would need to be your mortgage balance *plus* 10% of the new property's value, plus moving-associated costs.

kingstreet

If you can get a 10% deposit and cover all your other selling costs, the lowest mortgage rate (tracker) is currently 4.2%. A fix will be a minimum of 5%pa.

On a thirty year term, that means payments of £4.89 per month for every £1,000 you borrow.

Examples;-

£200k = £978 per month

£220k = £1,076 per month

£250k = £1,222 per month.

In common with others, I would also question the likely selling price of a 2008 purchase and the possibility of increased equity on a 95% mortgage. If (at best) the value has remained constant, the capital repaid will be minimal on a 30 year term (even with the overpayments) and the loan to value will remain above 90%.

Try this for a rough guide;-

http://www.nationwide.co.uk/hpi/calculator.asp

Without a significant injection of outside capital, I can't see a way of selling, covering all the costs and finding a £25,000ish deposit.

sg0102

Thanks for all the comments, clearly an interesting debate.

Just to ensure a complete picture I should add that in our time in the house we have also had it double glazed and refitted the bathroom.

kingstreet

sg0102 wrote: »

Thanks for all the comments, clearly an interesting debate.

Just to ensure a complete picture I should add that in our time in the house we have also had it double glazed and refitted the bathroom.

Useful improvements which will add to the appeal, but frankly, won't add value to the property.

I'm sure you don't want to hear this, but if property is being advertised for £200k it is likely to raise around £190k in offers. If one vendor with enough equity sells for less, say £185k, that figure hits the Land Registry and the next surveyor to value on that road will be looking at his comparable being £185k. Look at the selling prices here;-

http://www.houseprices.co.uk/

to see what property has actually sold and at what price. The implications for you are massive. You market, find a buyer, agree a price, then their surveyor values the property at a figure you can't sell for. By then, you've probably found somewhere and could have spent money which will end up wasted. Do you have savings you could use if this happens?

I'd caution you to research this carefully before you embark on a sale.

All the best. I hope it works out for you.