Moving House - Any advice Greatly Appreciated

beachbeth

We are a family of four (2 teenage daughters) and have really outgrown our present semi-detached house and want to move. However, we have lived here since we got married in 1985 so we are new to all this moving lark and everything is so different now than it was then so I would appreciate any advice anyone more knowledgeable could give me.

Im 42 and husband is 46 and we should be able to sell our house for about £180,000. We have a mortgage of £40,000 so that leaves us with £140,000. We are looking to buy a house for about £240,000 which means we need to borrow £100,000.

We have been looking at interest only mortgages as this keeps the monthly cost down and in a few years I am going to be coming in to some money so we would be able to pay off whatever we owed.

The best one I found was Kent Reliance Building Society who charge 5.15% fixed for 25 years (I realise we probably can't have a 25 year mortgage because of our age and would take out a 15-20 year). This is an interest only mortgage and works out at £429.17 per month which is ideal.

However, we are not quite sure how interest only mortgages work. After the term I presume we would still owe the original £100,000? Would we then have the choice of paying this off or taking out another mortgage (depending on our ages of course) ?

firesidemaid

hopefully an expert will come along soon....

but, some lenders may want to see the evidence of the 'vehicle' you will be using to pay off the mortgage in place eg. endowment, isa etc.

how sure are you that you will get this money, as nothing is certain in this life?

could you afford to make it a repayment mortgage anyway and look forward to the windfall in the future?

are you looking to upgrade your house now - will you want to down grade again when your kids fly the nest?

do you really need/want to move house when you are in such a good position. have you currently been making overpayments on your current mortgage and what is your current rate?

there are also lots of costs involved in the buying and selling - at least £5000 if not more (stamp duty alone on new house will be £2400!).

i'm not trying to put you off, just seeing if you have thought about all of these things?

good luck x

beachbeth

Im so desperate to move and would do just about anything if we could finance it. We are currently with the Coventry Building society and have our mortgage split into 5 different parts (from when we took out extra loans for extensions/improvements etc) and I can't remember the rates for them all but every time one rate finishes we always go back and take out another good scheme to make the interest as cheap as possible.

I shan't want to downgrade once the kids have left, unless I have to. I want this to be my forever house. I also realise there will be a lot of costs including stamp duty but we will take all this into account obviously.

I always look into the worst case scenario whenever doing anything like this. If, at the end of the term, I haven't received any inheritance for whatever reason then we will just have to think "tough luck" and move house to something much smaller so that we have no mortgage. We have £140,000 equity and this will buy us a little house somewhere.

JoeK_3

beachbeth wrote: »

Im so desperate to move and would do just about anything if we could finance it. We are currently with the Coventry Building society and have our mortgage split into 5 different parts (from when we took out extra loans for extensions/improvements etc) and I can't remember the rates for them all but every time one rate finishes we always go back and take out another good scheme to make the interest as cheap as possible.

I shan't want to downgrade once the kids have left, unless I have to. I want this to be my forever house. I also realise there will be a lot of costs including stamp duty but we will take all this into account obviously.

I always look into the worst case scenario whenever doing anything like this. If, at the end of the term, I haven't received any inheritance for whatever reason then we will just have to think "tough luck" and move house to something much smaller so that we have no mortgage. We have £140,000 equity and this will buy us a little house somewhere.

Have you considered a shared ownership property???

If you are unable to buy a property outright on the open market, then shared ownership is the ideal solution for you. Shared Ownership is a part buy, part rent scheme, which enables purchasers to buy a home in stages. Purchasers can buy an initial share between 25% and 75% of the value of the property and pay a subsidised rent on the remaining value of the property. Shared ownership properties can be provided by housing associations, housing trusts and local authorities. These organisations try be as flexible as possible with regards to the initial share purchased, but this may be as much as 50% of the market value at some of their developments.

A service charge will normally be payable to cover the cost of communal maintenance. The service charges payable can remain the same whatever percentage you own of your home and continues to be payable should you purchase your home outright where possible. You will need to have sufficient savings to cover the initial cost of home ownership: legal fees and stamp duty for example. You will need to be able to meet the costs of rent, mortgage, service charges and other associated outgoings.

As your income increases, you can buy further shares of your home until you could own 100% of the value and no longer share the ownership with the housing association or trust. The greater the percentage you own, the lower the percentage on which you pay rent. However, if you do not wish to buy more shares in the property, you do not have to. Obviously, the more you own, the less you pay in rent. And, if you can buy your home outright in the future, then no rent will be payable.

This way you could take out a repayment mortgage and you would not need to pay interest only.

JoeK

beachbeth

JoeK wrote: »

A service charge will normally be payable to cover the cost of communal maintenance. The service charges payable can remain the same whatever percentage you own of your home and continues to be payable should you purchase your home outright where possible.

So you continue to pay this even if you get to the stage where you own the whole house? That doesn't sound right!

JoeK_3

beachbeth wrote: »

So you continue to pay this even if you get to the stage where you own the whole house? That doesn't sound right!

This is only a small annual charge for all the owners and part owners to chip in and enjoy the amenities.

JoeK

beachbeth

JoeK wrote: »

This is only a small annual charge for all the owners and part owners to chip in and enjoy the amenities.

JoeK

But if you own the house 100% then you are the only owner surely? Sorry if Im being thick!

herbiesjp

sazzacat wrote: »

hopefully an expert will come along soon....

but, some lenders may want to see the evidence of the 'vehicle' you will be using to pay off the mortgage in place eg. endowment, isa etc.

how sure are you that you will get this money, as nothing is certain in this life?

could you afford to make it a repayment mortgage anyway and look forward to the windfall in the future?

are you looking to upgrade your house now - will you want to down grade again when your kids fly the nest?

do you really need/want to move house when you are in such a good position. have you currently been making overpayments on your current mortgage and what is your current rate?

there are also lots of costs involved in the buying and selling - at least £5000 if not more (stamp duty alone on new house will be £2400!).

i'm not trying to put you off, just seeing if you have thought about all of these things?

good luck x

Indeed you are right

HOwever at that loan to value, there are plenty lenders that will take on a pure interest only mortgage with no repayment vehicle in place.

A lot of lenders will accpet the fact that some people may then decide to downsize, and therefore clear the mortgage at that point in time.

The OP needs to check any schemes especially 25 year deals, if she wants to clear the mortgage outright when she comes into the expected money (there may be early repayment charges to pay should you clear the mortgage)

HTH

beachbeth

herbiesjp wrote: »

The OP needs to check any schemes especially 25 year deals, if she wants to clear the mortgage outright when she comes into the expected money (there may be early repayment charges to pay should you clear the mortgage)

HTH

I would definitely ask about these such penalties and also if we would be able to borrow more in the future whilst still on an interest only basis (we're not intending to borrow more but its nice to know if you can or not).

JoeK_3

beachbeth wrote: »

But if you own the house 100% then you are the only owner surely? Sorry if Im being thick!

This could be an estate where all the gardens, sorrounding fields play grounds etc. are looked after for you and you are paying for the facilities, not the house.

JoeK

beachbeth

We have been looking into different mortgages, including our present lender and Kent Reliance BS come out the cheapest. We could borrow £100,000 over 15 years fixed for the whole term at 5.3%, making payments of £429.17 per month.

Has anyone heard of Kent Reliance or had a mortgage through them? Should I ring them for a proper chat or should I just go to an independant mortgage broker?