Downsizing to free up money!

FrugleRock

Hi guys, I've got a feeling this will sound to most like a daft question, but I can't get my head around the it!!!!

We would like to downsize our house as it's too big and we'd like to have more free cash!

Now our mortgage is currently approx £158k so if we move to a smaller house and the mortgage we need is a lot less than this (say £130k), do we then have to repay the difference to reduce the mortgage down??

sorry if that's really stupid but I didn't know where else to find the answer!!!


thanks in advance

InMyDreams

When you sell your house, you pay back your current mortgage. The whole lot. Not just the difference. (Hopefully you are not in negative equity.)

When you buy another house, you must take out a completely new mortgage. For the whole amount. The new mortgage will be subject to all the usual checks on credit, deposit, affordability, house valuation, etc etc, etc.

Pee

A mortgage broker will be able to advise you on what the new mortgage could be i.e. 90% of value depending on your income and credit rating.

opinions4u

The mortgage is repaid by the property sale.

You then take out a new mortgage on the new property.

Do your sums carefully. Estate agent, solicitor, stamp duty, mortgage discharge fees, arrangement fees, survey fees etc eat away at everything.

FrugleRock

Thanks everyone x

ermine

one alternative if you have too much space is to take in a lodger. It's not for everyone but you are allowed to receive up to £4k tax free under the rent a room scheme. You usually do have to tell your mortgage company and insurance company that you are doing this, but they should be okay with it.

Saves the moving costs and sales costs if money is tight...

hcb42

FrugleRock wrote: »

Hi guys, I've got a feeling this will sound to most like a daft question, but I can't get my head around the it!!!!

We would like to downsize our house as it's too big and we'd like to have more free cash!

Now our mortgage is currently approx £158k so if we move to a smaller house and the mortgage we need is a lot less than this (say £130k), do we then have to repay the difference to reduce the mortgage down??

sorry if that's really stupid but I didn't know where else to find the answer!!!


thanks in advance

tbH, there cannot be a massive difference in payment between those two - and it can be quite hard downsizing as well, with the costs of moving and whatever, it might barely be worth it.

We are looking to downsize as well, but we can significantly change our mortgage, from about same as you (£160K) to half or even £50K but to do it for £130k mortgage seems a lot of upheaval and sacrifice. We're all different I realise that.