Leaving a 125% mortgage and wanting to buy a new house....

blueelephanttrunk

Hello all,

Just after a bit of advice really!

We bought our first home in 2005 with a Northern Rock 125% Mortgage which had a fixed rate of interest of 5% for 5 years - this expires in December this year (Yippee!)

Stupidly a couple of years into the mortgage we borrowed against it for £5000 - which means we now have the 125% mortgage for £89,000 and an extra £5000 loan on top of that which we pay off as part of the one monthly mortgage payment.

We bought our house for £89,000 - I'd say it's probably worth about the same now, maybe £95,000 ish as we've had a lot of work done in it, new heating, re - wiring, cellar done out etc.

We're wanting to move to a bigger house once our current deal with Northern Rock ends - We're looking at houses around the £160,000 mark. I'm not sure though, how we would go about moving the mortgage in the first place or how much we'd need to save? Would we be able to get a new mortgage for the full £96,000 we owe at the minute if we weren't able to save a deposit for the next house in time? Also, how much deposit do you think we'd need to save for a new house around the £160,000 mark


I am totally useless at mortgages, so any help is super appreciated!

madmish00

Unless you have a stash of cash hidden away somewhere there is no chance!

If you managed to sell your house for 95k (and that is an if) you would still owe Northern Rock £1k to clear the mortgage.

You would then be looking to buy a £160k house with zero deposit. No bank will touch that. At the absolute bare minimum you would need a 10% deposit which would mean saving £16k (17k if you include the £1k you would still owe)

That is before the fees involved in buying and selling (and we are currently selling at 92.5k and buying at 175k and the fees are just short of 5k)

I think you need to set your sights a little more realisitically unfortunately.

blueelephanttrunk

Thatnks for the reply - eeeek about the fees, I didn't realise they'd be so high! (Northern Rock paid ours for us when we first bought our house) So had no idea they'd be that much.

Perhaps the best thing to do is stick where we are for a bit longer and save save save!

Does the 10% deposit still apply when moving mortgages? So say if we wanted to leave Northern Rock in December to get a better deal but still stay in our house, would I still need to save up 10% of our house price or would I be able to get £96,000 without a deposit? Sorry, as I say I am useless!

HappyMJ

blueelephanttrunk wrote: »

Thatnks for the reply - eeeek about the fees, I didn't realise they'd be so high! (Northern Rock paid ours for us when we first bought our house) So had no idea they'd be that much.

Perhaps the best thing to do is stick where we are for a bit longer and save save save!

Does the 10% deposit still apply when moving mortgages? So say if we wanted to leave Northern Rock in December to get a better deal but still stay in our house, would I still need to save up 10% of our house price or would I be able to get £96,000 without a deposit? Sorry, as I say I am useless!

You will need at least 10% equity in the property so it'll be unlikely that you will be able to find a competitive mortgage in December. If it's worth £95,000 you'll only be able to remortgage for £85,500 so you'll have to save £9,500 plus fees by December to be able to leave NR.

Idiophreak

madmish00 wrote: »

If you managed to sell your house for 95k (and that is an if) you would still owe Northern Rock £1k to clear the mortgage.

How did you work that out?

Wonder if I'm missing something...

blueelephanttrunk

HappyMJ wrote: »

You will need at least 10% equity in the property so it'll be unlikely that you will be able to find a competitive mortgage in December. If it's worth £95,000 you'll only be able to remortgage for £85,500 so you'll have to save £9,500 plus fees by December to be able to leave NR.

That's rubbish, looks like beans on toast for the next 5 years for us!

I wish we'd never bought the bloody thing! lol

blueelephanttrunk

Idiophreak wrote: »

How did you work that out?

Wonder if I'm missing something...

I owe them £96,000, so would have to put £1000 towards if we only sold for £95,000.

ViolaLass

blueelephanttrunk wrote: »

Does the 10% deposit still apply when moving mortgages?

Moving a mortgage is irrelevant here. You have no equity in your current house and no savings so you have no deposit and yes, you definitely need a minimum 10% deposit, plus the income multiples need to stack up. What is your joint income? You need it to be around £36k.

blueelephanttrunk

ViolaLass wrote: »

Moving a mortgage is irrelevant here. You have no equity in your current house and no savings so you have no deposit and yes, you definitely need a minimum 10% deposit, plus the income multiples need to stack up. What is your joint income? You need it to be around £36k.

Our joint income is £49,500, so should be OK for new mortgage when we've saved.

We're currently putting £1000 a month into our honeymoon fund (we go in October) so, when we get back will be able to put that money towards the new house / mortgage.

Thrugelmir

blueelephanttrunk wrote: »

That's rubbish, looks like beans on toast for the next 5 years for us!

Use the money saved to repay your mortgage debt.

HappyMJ

blueelephanttrunk wrote: »

That's rubbish, looks like beans on toast for the next 5 years for us!

I wish we'd never bought the bloody thing! lol

LOL...never mind....A tip though beans (25p per tin) and bread (£1 per loaf) are rather expensive. You can pick up a big bag of potatoes (less than 40p/kilo) and can do a lot more with them for cheaper than beans and bread.