mortgage help- house worth less than paid

jacobar90

We need to move (work reasons) but if we sold our house now we'd get 10k less than what we paid for it.

we paid 120k our parents helped us out with a deposit (which we have to give back if we sell) they gave us 25k and we put in 5k.

Our mortgage is 84k at present.......

we would get £110k if we sold, minus 25k, leaves us with 85k in the bank so not negative equity.

My question is that means we only have borrowed money (no deposit as such. Does that 85k count as a deposit for next property or are we stuck?

confused....

anselld

jacobar90 wrote: »

My question is that means we only have borrowed money (no deposit as such. Does that 85k count as a deposit for next property or are we stuck?

Any remaining equity after sale and discharging the mortgage and repaying your parents can be used as deposit for next property. ie £1k

Yorkie1

anselld wrote: »

Yes, any remaining equity after sale and discharging the mortgage and repaying your parents can be used as deposit for next property.

Which, just to clarify OP's figures, means that OP would have £1K equity - and not the £85K mentioned in the question. As anselld says, the mortgage has to be repaid on the sale of the house; however, the mortgage may be portable if the OP meets the new lending criteria.

The OP's difficulty will be in raising sufficient extra money for deposit and sale / purchase fees.

anselld

Yorkie1 wrote: »

Which, just to clarify OP's figures, means that OP would have £1K equity - and not the £85K mentioned in the question. As anselld says, the mortgage has to be repaid on the sale of the house; however, the mortgage may be portable if the OP meets the new lending criteria.

The OP's difficulty will be in raising sufficient extra money for deposit and sale / purchase fees.

Indeed, I re-read the £25k repayment to parents whilst you were posting.

pmlindyloo

we would get £110k if we sold, minus 25k, leaves us with 85k in the bank so not negative equity.

You would not have £85,000 in the bank because you would have to repay the mortgage so you would have £1000 in the bank.

You could speak to your morgage lender and see if they would allow you to 'port' your mortgage to a new house but this would very much depend on the Loan to Value Rate on your new property, the ability to pay your new mortgage etc etc.

One other possibility is the deposit that was lent to you by your parents. Did they envisage that you would be paying it back when you had a good amount of equity in your house? Would they allow you to keep it until you are in a better financial position?

Are you being transferred by your work to another area? Would they help with relocation costs?

What are the prices like in the new area? Would you be looking to buy a cheaper place?

If you can't get help from your current mortage lender/your parents won't let you hang on to the deposit money then I think you will have to rent and save up for a deposit.

lincroft1710

In reality you may well be left with a minus figure after selling as estate agents and solicitors fees for selling will be almost £3K. So even if you get £110,000, your debts will be £112,000 (£84K + £25K + £3K)

kingstreet

Just a clarifying point. Portability doesn't allow the borrower to move a mortgage from one property to another. It only allows the rate from the old mortgage to be moved to a new mortgage with the same lender.

To be able to do this, the borrower must satisfy the lender's loan to value, status and affordability requirements as does any other borrower. There is no guarantee.

The borrower may not qualify for a new mortgage with the current lender if his/her circumstances have changed. Then, portability will not be an option.

jacobar90

sorry guys being really stupid but thanks for your help, I thought it meant that ultimately it was my friend that confused me, she sold her house but couldn't buy because her husband had just changed jobs.... anyway she said that they just had all the money from the sale of their house sitting in the bank while they rented...

kingstreet

jacobar90 wrote: »

she said that they just had all the money from the sale of their house sitting in the bank while they rented...

They had their equity sitting in the bank waiting, they didn't have the mortgage money.

dancingfairy

How much deposit do you think you will need for you new home? Will it be cheaper, more expensive or about the same price? Will your parents allow you to re-borrow from them? Perhaps you can reduce the amount you borrow from them - ie only borrow 20k instead of 25k? or perhaps you could arrange a repayment scheme with them (even if it's only a tiny amount per month to reassure them that they will get their money back?).
Best of Luck
df

PasturesNew

jacobar90 wrote: »

we paid 120k our parents helped us out with a deposit (which we have to give back if we sell) they gave us 25k and we put in 5k.

Our mortgage is 84k at present.......

we would get £110k if we sold,

£110k - sell for
£84k - mortgage company get paid back
£2k - estate agents and solicitors to sell*
====
£24k - remaining

Parents then want back £25k, so you'd hand over the £24k to them, still owe them £1k and have £0 in the bank.

Your next deposit on another house is therefore £0 and you'd have to borrow the £24k back from your parents (still owing them £25k) to put down a deposit of £24k

* the estate agent and solicitor fees are variable, £2-3k