How to sell my first house, and buy my second?

TangoFiver

I've looked for this in the search function but to no avail, just plenty of posts on buying a second house on top of the first...anyway...

We (me and the wife) are 3 years into a 5yr fixed mortgage on our first house. We really want to move, and are collectively earning around 30% more than when we took out the 80% mortgage 3 years ago.

How does the mortgage work for the remaining 2 years of the fixed term? I presume I'll need to get in touch with them (Yorkshire Bank) to get the specifics, but will I have any bargaining power to borrow more money?

Also, I know that it costs a lot to move, from stamp duty to solicitors fees etc, but how much of this can we put on the mortgage, effectively borrowing it? Or is that up to us?

Now this may be a daft question, but should we find a house to move to, and not yet sell our current house, I guess there's nothing we can do until we sell it?

Thanks in advance!

Joe

go_cat

Can you port your mortgage to a new property?

If yes as long as you pass their affordability and they are happy to lend to you to you, you should be ok.

If you can't port then you will be liable for early repayment fees on your fixed rate. You need to read your mortgage contract carefully.

Kynthia

If your mortgage is portable then you will probably be able to avoid paying the redemption fee due because you are still within the fixed term. Only the rate is portable so you will need to pass current lending criteria, for example what your earnings, debt, deposit/equity amount and loan to value percentage are.

Unless you can afford to buy the new property outright, earn so much that you can qualify for two mortages or you get a very expensive bridging loan you will need to sell your current property before buying the next. Once you accept an offer on your place, start looking for somewhere to buy and then you will be part of a chain trying to complete on the same day. To avoid being part of a chain you could complete your sale and move in with friends/family or rent until you complete on your purchase.

Mickygg

Now this may be a daft question, but should we find a house to move to, and not yet sell our current house, I guess there's nothing we can do until we sell it?

Thanks in advance!

Joe [/QUOTE]

Er yes. Unless you have a spare £100k down the sofa! Very few people will accept an offer unless your house is under offer.

Notmyrealname

OK....two options...

You put yours on the market and go looking for one when it looks like you've got a buyer. You then end up in the standard "buying chain" which despite looking like a complete disaster always somehow seems to work in the main.

Or you put your property on the market, find one to buy and if you buy before you sell, get a bridging loan to pay for it until yours is sold however this is quite expensive.

advice_please_2

Notmyrealname wrote: »

OK....two options...

You put yours on the market and go looking for one when it looks like you've got a buyer. You then end up in the standard "buying chain" which despite looking like a complete disaster always somehow seems to work in the main.

Or you put your property on the market, find one to buy and if you buy before you sell, get a bridging loan to pay for it until yours is sold however this is quite expensive.

How does bridging loan work?
It beats waiting around to get house sold, loosing the house you like, renting, etc.

Kynthia

advice_please wrote: »

How does bridging loan work?
It beats waiting around to get house sold, loosing the house you like, renting, etc.

If it did it would be the norm, but it isn't.

Notmyrealname

advice_please wrote: »

How does bridging loan work?
It beats waiting around to get house sold, loosing the house you like, renting, etc.

You take out a loan for the value of the property you're buying which you repay with the money you get for yours when you sell it.

TangoFiver

Thank you all for the replies!

I rang our mortgage lenders (Yorkshire Bank), and they said yes, it can be ported to another property :j

I asked roughly how much more we could borrow, and she said around £150k, but we wouldn't want to borrow that much on top of the existing mortgage.

She said that it would be seperate and on top of our current mortgage, so would be a 90% LTV...

...So IF we sell our house for say £110k, we get £30k (£20k deposit + £10k 'profit'), and have our outstanding mortgage of around £75k...

...and then say buy a house for £150k. We would use our original deposit + profit of £30k for the 20% deposit to meet the criteria for our portable mortgage of £75k (£105k)...

...Then the remaining £45k would be borrowed on seperate terms from Yorkshire Bank?

Or will we need to raise a % of the value for the 'seperate' mortgage? :huh:

Thanks again,

Joe

(yes I should have asked this on the phone, but i'm not too good at remembering/understanding things explained to me on the phone! )

TangoFiver

So I've just spoken to the Yorkshire Bank, and it's all about as clear as mud

I tried to ask for an example for if we wanted to buy a house for 150k. I think she said that it would work out at around 77% LTV to borrow a further 40k...

I also asked if we could use the borrowed money to pay for solicitors, estate agents & stamp duty, and she told me that it wouldn't really make a difference as the money has to come from somewhere. So does that mean that we should borrow more to pay for these things if we cannot afford to pay for them?

She gave me 4 options for borrowing the additional 40k:

2yr fixed @ 2.99%
3yr fixed @ 4.19%
5yr fixed @ 4.49%

and a standard variable I think, but she was too quick for me to write these things down

I asked why do the rates go up for the longer term mortgages, and she said "thats how mortgages work". I thought that if you signed up to stay with someone for longer you would be rewarded with better rates?

So, IF we sell current house for 110k, (around 75k of which is the Yorkshire Banks') then borrow a further 40k that would give us enough to purchase a 150k house, but nothing for solicitors/stamp duty etc?

Feeling rather frustrated and confused, I might phone them back and ask them to clarify, as it's not really making much sense. She seemed to be talking to me as if I knew what all this was about! :rotfl:

kingstreet

You need to think about the lender's maximum loan to value. If it's prepared to advance you 90%, you can't exceed that. If it will do that and that's enough to buy your new property, you simply hold back the additional funds you would have used for your deposit and pay the bills with that.

For example, if you buy for £150,000;-

£150,000 purchase price
£15,000 deposit

£135,000 maximum 90% mortgage.

So, IF we sell current house for 110k, (around 75k of which is the Yorkshire Banks') then borrow a further 40k that would give us enough to purchase a 150k house, but nothing for solicitors/stamp duty etc?

So you have equity of £35k. You need to put down a minimum of £15k, leaving you £20k for fees and other costs. This is a bit extreme, but the example works. You may feel you want to put down £25k of your equity as a deposit, leaving £10k for fees and costs. This means a smaller mortgage of £125k.

You'll then have a mortgage of £125k with £75k of that on your current rate and the additional £50k on a new rate. The new rate differs because the money markets charge higher rates for longer term finance because they have less certainty of what rates might be the further in the future you go. Uncertainty = cost.