what % is interest what% is repayment?

tiggy748_2

Hi

We are looking to move due to daughters education - it will be just for two years, so hubby wanst to sell house to rent elsewhere for time being. Im concerned we are going to loose too much money on this.

So im looking at putting out 30k aside from the sale to make another 5-8K over the next two years (which will cover the house value rise) plus as our mortgage would also be decreasing with each payment i want the savings plan to cover this as well. trouble is I cant work it out, and mort is in hubbys name so bank wont tell me.

The current mortgage is 77-78K at 3.99%. Repayments are £490 ish each month.

of each payment what is interest and what is repayment?
what will the balance owed be by June 2015?
Any idea what the redemption chrages will be if we did sell and move? we are out of early repayment charges etc but im assuming there are charges to pay off the mortgage?

thanks in advance

laptop80

Your redemption charges are likely outlined on your mortgage statements.

I make the interest part of your payment to be £256-259 per month, with the rest of your payment coming off your capital. If you put your details into one of the mortgage payment calculators you will be able to see what the balance will be at certain dates.

I'm not sure I fully understand where you're coming from though; if you sell the house and rent for a while, why woudn't you just save all of the money raised until you are ready to buy again? Why does it matter what the interest payments would have been on a house you no longer own and a mortgage that no longer exists? All that matters is getting the most out of your savings during the time you're renting to put you in as good a position as possible when you are ready to buy another house.

maninthestreet

Where are you going to be able to get a return of at least 8.3% p.a to get £5K in two years from £30K??

Radiantsoul

Are you planning to sell the property. Rent somewhere closer to your daughters school for two years and then buy somewhere back where you are now in two years? Or do you intend to stay closer to your daughters school(presumably she may be off at uni or working somewhere else after)?

I think you are aiming to maintain the same position as if you were paying rent, so when you re-enter the housing market in a few years time you will be in the same position as if you had continued to own.

I guess the risks are interest rates my rise, or property prices may accelerate whilst you are out of the market. Your current interest rate is not terrible, and you may have redemption penalties.

laptop80

maninthestreet wrote: »

Where are you going to be able to get a return of at least 8.3% p.a to get £5K in two years from £30K??

I would like to know this too - beats the *£$% out of an ISA

I'd be less worried about interest payments and more about the one-off fees you would accrue when selling (and eventually buying) houses. Redemption fees vary, but they can be fairly significant in some cases. You'll most likely be giving estate agents a slice too. Then when you buy you'll have conveyancy & survey fees, mortgage arragement fees, possibly stamp duty too.

Seems like a lot of effort and expenditure for a 2 year move. Renting out your current property for a couple of years would seem simpler and keep you in the housing market if you're worried about rising values. Of course, we have no way of knowing what the market will do - prices could just as easily go down if the precarious global economy takes another nosedive.

benalder284

laptop80 wrote: »

Seems like a lot of effort and expenditure for a 2 year move. Renting out your current property for a couple of years would seem simpler and keep you in the housing market if you're worried about rising values. Of course, we have no way of knowing what the market will do - prices could just as easily go down if the precarious global economy takes another nosedive.

Couldn't agree more.

Voyager2002

Another point: when you sell your house you will have to repay your mortgage. No lender would allow you to walk away with all their lovely cash, not leaving them a house as security.

ILW

Appears OP has found a way of getting 8% after tax on cash deposits.

OffGridLiving

You also need to factor in your increased outgoings. The rent on a family home is more than likely going to be higher than your mortgage payments. Depending on the quality of the property you rent, you may have higher utility bills. If you go for a smaller property than you currently have, you may have to pay to store some of your belongings. The removal costs should also be considered, especially if you have to move more than once because your landlord decides to sell up.

As other posters have said, if you are moving to the new area on a temporary basis, then it'd be much better to rent your house than to sell it. You'll have someone paying off your mortgage and if there is a surplus, perhaps even subsidising the rent on your new place.

A final thought is that if you decide to sell, there is no guarantee that you will be able to move before term time starts. You may have to sell your house for substantially less than it's worth just to attract a motivated buyer, costing you money.