Buying/Selling house + overpayments advice

ptkloon

Hi guys,
I am planning on moving to a bigger house soon, my house will be valued next week hopefully at around £200,000. A bigger house would probably cost us in the region of £250,000.
Our current mortgage is at approx £125,000 over 17.5 uears and costs us £733.61 per month. The interest rate has recently dropped to 2.5% from our fixed rate of 5.8%.
I have recently inherited £40,000 and have savings of about £20,000 which we would like to keep for emergencies.
My question is, would I be best putting that £40,000 into the mortgage now or waiting until I have sold my house then add it onto the deposit for a new house.
Also would I be able keep the mortgage at the same level, for example if I sold the house for £200,000 and bought one for £240,000 using the inheritance money to pay off the difference?

Hope this make sense, any help would be great, thanks.

Sepa74

Hi PTKloon,

I'm afraid your circumstances are so specific that you need to do the sums for each option, weigh up the pros and cons and then decide what is best for you!

Here are some things you need to consider:

How long is your house-move likely to take? months? years?

What interest rate (after tax) can you get on your inheritance? Is it lower or higher than the mortgage interest rate?

Do you want to tie up the inheritance money by paying it on the mortgage, or would it be better using it to pay the moving costs?

Is your existing mortgage portable (can you increase it and use it for your new house?) if not, what interest rates are you likely to be looking at for your new mortgage?

I hope this helps you with some of the things you need to think about!

dimbo61

You need to speak to your existing lender about porting your current mortgage
You may well have to use some or all of the inheritance/savings to get the right LTV and keep your excellent current mortgage rate.
If you home is worth £200K and you sell for that price then you have approx £75K to put down on the next property which is a good start but you need to start with your lender.
Dont forget the stamp duty at 3% over £250K
Good luck

ptkloon

Thanks guys, I've emailed my financial advisor to get some info, it hopefuly wont take us too long to sell, I have arranged for the solicitor to come round next week to value our property so that will get the ball rolling (anyone know how long, on average it takes to get the property advertised etc after getting home report in Scotland?)
We have seen a house that we would love and it seems to be at the right price but we would like to sell our own one first so I doubt it will stay on the market for long enough
I don't think my mortgage is portable, I had a meeting with the mortgage advisor at C & G when our 3 year fixed term came to an end and she explained that I would have to start a new mortgage if I required a bigger sum - but at the time I didn't have this lump sum to make up for the difference.

dimbo61

Your mortgage is portable ! as long as you are not borrowing more! so thats when you use some or all of the savings you now have
Its a great rate so try and keep it

ptkloon

dimbo61 wrote: »

Your mortgage is portable ! as long as you are not borrowing more! so thats when you use some or all of the savings you now have
Its a great rate so try and keep it

Is that true? will I just have to call C+G and explain to them that I am moving but wont require a bigger mortgage?

ptkloon

ptkloon wrote: »

Is that true? will I just have to call C+G and explain to them that I am moving but wont require a bigger mortgage?

Anyone?

Also does anyone know how long it takes from getting your house valued, to getting in on the market (advertised etc)

Thanks