Moving house - can anyone help an idiot?!

snidget

Thanks Tobruk - I think we'll ring our mortgage broker tomorrow to see what they think - if they say we can't increase, then so be it.

With the value of the flat, the agent has said that he wouldn't want us to accept anything under £197500 (£5k more than we paid), and a lot of similar properties are selling for that price in our town just now.

I guess I've just scared myself, everyone talks about getting on the property ladder, but I thought climbing it was the easy bit.

LittleMissAspie

snidget wrote: »

If I need to find a deposit all over again I may as well be a first time buyer:eek:

But you never had a deposit in the first place. You'll have paid very little off your mortgage in just three years, especially one of that size, and any profit on the selling price is going to be eaten up with costs.

Time to start overpaying and get the mortgage down.

snidget

sonastin wrote: »

The notion of the "ladder" making trading up easier is based on 2 assumptions:

1) you'll have paid off a proportion of your mortgage by the time you come to move. In the early years, most of your repayments go on interest but after a while, the initial loan starts to go down noticably. 3 years in is a bit too soon for your repayments to have much of a visible dent.
and here's the big one...
2) property will increase in value so that by the time you come to sell, you'll have loads of equity to put down as a deposit on the next place...

You've been caught out by no.2. Property is no longer increasing in price at a stupid rate - in most areas of the country it is falling or at best stagnant. Some places are showing small rises but nothing like the rate that you'd need to be ready to trade up so soon.

If your circumstances have improved - e.g. if you've had decent payrises in the meantime - lenders might be willing to loan you more now than they would first time round but you would still need to put in a decent chunk of cash yourself as a deposit. As lending criteria has tightened since you bought, not only do you need a bigger deposit because the house is more expensive but you also need a bigger % of the higher value of the next house. I know it seems like a double-whammy but its because lenders gave away money too easily at the time you were buying.

Thanks - it's starting to make more sense now!!! I think the problem is that properties like ours have a ceiling, and £200k is probably close to it. I was so pleased as we were looking 12 months ago at £20k negative equity.

Might go and buy a lottery ticket

TOBRUK

snidget wrote: »

Thanks Tobruk - I think we'll ring our mortgage broker tomorrow to see what they think - if they say we can't increase, then so be it.

With the value of the flat, the agent has said that he wouldn't want us to accept anything under £197500 (£5k more than we paid), and a lot of similar properties are selling for that price in our town just now.

I guess I've just scared myself, everyone talks about getting on the property ladder, but I thought climbing it was the easy bit.

Remember, the value of the flat is only worth what someone is willing to pay for it. Don't take on board too much of what the agent is saying! You are the only one who can tell what you CAN accept! I worked out a figure of how much under the price I could accept and if I couldn't get to that figure, then I couldn't sell! The agent can only give a guide price, and yes, you can gauge what other similar properties are going for, but people are selling for different reasons and some are desperate to sell or have to sell. Also, as you will find when you are viewing properties, it depends what you are looking for - some properties are in better condition (inside) than others, what the layout is - whatever suits you best, or whether you will need to modernise (if you want to) how much you would need to spend to have it as you want etc etc.

When I was viewing properties, the layout was important to me, somewhere which didn't need much work etc. I went round each room and calculated (estimate) how much each room would cost me if I needed to change something immediately - such as flooring (carpet) paint work, perhaps a new boiler, etc etc there is always something you want to change! It can be very stressful!;)

kingstreet

Can I stick my "portability" oar in here?

Portability is moving your old rate to your new mortgage, not moving your old mortgage to a new property.

If your current rate is portable it will be mentioned on the KFI and on the offer from when you took it out. Portability is the ability to transfer the rate from one mortgage to another when you move house.

In practical terms, you have to approach your lender for a new mortgage on the new property and satisfy their current criteria, deposit and status requirements. If you are borrowing less, a partial repayment charge will be likely. If you are borrowing more, the extra money will be on a choice of the lender's current products, with the current rate ported to the existing amount you owe for the remaining time.

Remember, it is not a guarantee of a mortgage, merely the opportunity to see out the original offer.

snidget

Thanks once again! We had a look at all the numbers last night and have so far cleared about £11k of the original mortgage, and have the money in savings to add a bit to that.

Probably another stupid question, but will that deduct from the amount of deposit I'd need to find?

kingstreet

snidget wrote: »

Thanks once again! We had a look at all the numbers last night and have so far cleared about £11k of the original mortgage, and have the money in savings to add a bit to that.

Probably another stupid question, but will that deduct from the amount of deposit I'd need to find?

Yes. If you want to buy for example for £200k, you'll need at least £20k deposit. Whether than comes form equity in your home, savings or a lottery win is irrelevant. The only thing lenders don't like is extra borrowing to fund the deposit.

TOBRUK

kingstreet wrote: »

Can I stick my "portability" oar in here?

Portability is moving your old rate to your new mortgage, not moving your old mortgage to a new property.

If your current rate is portable it will be mentioned on the KFI and on the offer from when you took it out. Portability is the ability to transfer the rate from one mortgage to another when you move house.

Hi kingstreet,
I'm no expert and I'm only going on my personal experience: I have a year or so left on the fixed rate of my (current) 'portable' mortgage, however the lender didn't allow me to add on the extra amount needed for me to purchase my new poperty. They are treating the extra amount as a 'new mortgage' at a different fixed rate.

Not sure why this is! I know the 'portable' mortgage allows me to take my mortgage on to mynew house but why wouldn't they add the extra amount onto the same mortgage?!

kingstreet

TOBRUK wrote: »

Hi kingstreet,
I'm no expert and I'm only going on my personal experience: I have a year or so left on the fixed rate of my (current) 'portable' mortgage, however the lender didn't allow me to add on the extra amount needed for me to purchase my new poperty. They are treating the extra amount as a 'new mortgage' at a different fixed rate.

Not sure why this is! I know the 'portable' mortgage allows me to take my mortgage on to mynew house but why wouldn't they add the extra amount onto the same mortgage?!

You're falling into the trap a lot of borrowers are snared by.

Products are normally limited by the amount of money available for the time they are offered. Once that money is gone, it's impossible to get it back. If you have a thee year gap, there's no way the lender can guarantee getting you extra money on a rate which may now be drastically better than the market rate.

So they port the existing rate onto your new mortgage and make up any extra borrowing you might need on whatever rate you can choose from at that time.

Let's look at an example. You have an £80,000 mortgage at a 4% fix for five years. After three years you want to move and you need an extra £20k. Rates have increased and the best five year fix is now 9%.

You won't take a whole new deal, because you'll suffer repayment penalties and the rate is worse. So you take out your new £100,000 mortgage and port the current 4% rate on the first £80k.

The extra £20k is available on a new product available today, but you don't fancy the five year fix and like the idea of tying your deals back together.

You take the extra £20k on 6% fixed for two years, as it's cheaper and you'll then have the option of a whole new deal with your current lender in two years, or the option to move your whole mortgage by remortgaging to a new lender altogether.

In general what I suggest is that borrowers think of a mortgage on a property and a product rate, or rates, on the mortgage.

snidget

RenovationMan wrote: »

Out of interest, why are you moving again so quickly? 3 years in your current house is quite a short amount of time.

It was never a property we wanted long term (naive? Me?) - now we have extra circumstances. A 2 bed flat with no direct garden access and a 2 year old is getting tough, and area and neighbours who are nose-diving etc etc.

It's not essential that we move, but we're getting older, and would like another child, so we thought it would be more sensible to move now.