mortgage riddle

beefcake42

my wife and i were wondering if anyone could help with this mortgage riddle, we dont know if its very simple or we are just being a bit stupid. we are selling our house for 285000 and we have a mortgage of 78000, we are looking to downsize to a house for 210000, but wish to take our mortgage with us and put a deposit on a second house for our daughter using the equity from the sale. the way we see it if we port our mortgage to our daughters house ,we have the full 285000 from the sale, minus 210000 for our purchase leaving 75000 for a deposit meaning we would need to increase the mortgage by approx 50000 as the house for her is 200000. we appreciate all this is plus fees etc but the general bits are there, we would just like confirmation that this is right or have we missed something?

Horseunderwater

I think that your first port of call is to someone like the motley fool, they have a very helpful mortgage department that can sort these theoretical things out for people. I am not too sure but in my experiance, a mortgage is held on one property at a time (domestic domicile wise) and where there is excess equity, there may be some scope for covering or guaranteeing another loan that is secured via the first property. Example being that you want to buy some commercial premises and use your house as security. So I should think it is possible, but before you get to that point, you need to speak to someone who can give proper advice. I know that I do not know enough to say whether it can be done with a 100% certainty.

getmore4less

UK motley fool does not deal with mortgages
http://www.fool.co.uk/.

It is an investement forum

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if you port your mortgage to your daughter house you will have to own part/all of the house and be on the mortgage.

Is the plan to let her live there for free or become a landlord.


What might work is you port to your new house, if the lending criteria are met

That would leave a bigger deposit.

The extra lending either a [STRIKE]small [/STRIKE]mortgage on the daughters place or extend the existing one to buy the second house outright.

One issue will this deposit and is it a gift or a loan, this will effect the borrowing on the daughters place if she is to be the owner.

what are you goals,
who owns those houses,
who pays the mortgages,
gifting or lending to the daughter.

income and ages lending criteria . will determine portability lending levels and terms.

Wh05apk

I think you are over complicating the numbers? The way I see it is that you will be buying 2 properties, £200k & £210k, making £410k, you will have £207k equity (less costs/stamp etc) meaning you will need approx £203k &costs, how you split this across the 2 properties will depend on rates etc and how you intend to help your daughter.

getmore4less

beefcake42 wrote: »

my wife and i were wondering if anyone could help with this mortgage riddle, we dont know if its very simple or we are just being a bit stupid. we are selling our house for 285000 and we have a mortgage of 78000, we are looking to downsize to a house for 210000, but wish to take our mortgage with us and put a deposit on a second house for our daughter using the equity from the sale. the way we see it if we port our mortgage to our daughters house ,we have the full 285000 from the sale, minus 210000 for our purchase leaving 75000 for a deposit meaning we would need to increase the mortgage by approx 50000 as the house for her is 200000. we appreciate all this is plus fees etc but the general bits are there, we would just like confirmation that this is right or have we missed something?

Didn't check the numbers

You still need to pay off the mortgage to port it, so you have counted the £78k twice

see above for the simple way to do the numbers.

kingstreet

beefcake42 wrote: »

my wife and i were wondering if anyone could help with this mortgage riddle, we dont know if its very simple or we are just being a bit stupid. we are selling our house for 285000 and we have a mortgage of 78000, we are looking to downsize to a house for 210000, but wish to take our mortgage with us and put a deposit on a second house for our daughter using the equity from the sale. the way we see it if we port our mortgage to our daughters house ,we have the full 285000 from the sale, minus 210000 for our purchase leaving 75000 for a deposit meaning we would need to increase the mortgage by approx 50000 as the house for her is 200000. we appreciate all this is plus fees etc but the general bits are there, we would just like confirmation that this is right or have we missed something?

You sell for £285k and repay your £78k mortgage. That leaves you £207k residue for your next purchase. A mortgage can't be transferred from one property to another, so think of this mortgage being repaid first on the sale.

You then want to buy another property for yourselves for £210k, plus you want a £75k deposit for your daughter's property?

Of the £207k equity you had, £75k is being used for the deposit, leaving you £132k for the deposit for your property. To reach the £210k purchase price, you'll then need a mortgage of £78k.

If you return to your current lender, they may be willing to lend you the £78k and to port the current rate from your existing mortgage to the new one, if you satisfy its criteria and affordability requirements. There's no guarantee, you are a new applicant for a totally new mortgage.

Your daughter will then need a £125k mortgage, 62.5% of the value of the property.

You'll need to pay fees and stamp duty for my figures to be completely correct, but this is how it works.