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Second stepper curious about my deposit/capital
jimmyriverbank
Posts: 5 Forumite
Hello all,
Confused novice here looking for answers! Hopefully my logic on the below is correct but you never know with mortgages/finance...
We bought a flat 4 years ago for £200k. We borrowed £175k on the mortgage with the other £25k in deposit.
Next year we are looking at moving on and buying a new place. We have paid off £5k of the mortgage (depressing!!), so have £170k left. However the value of the flat has gone up and we expect to be able to sell for say £250k. We also expect to have an additional cash deposit of say £20k.
In addition to the £20k deposit, I believe we will have approx £80k of what I would now call capital (£25k from original deposit, £5k of mortgage paid off, and £50k of added value on the flat).
Is that right? Or am I barking up the wrong tree completely?!
Any advice would be much appreciated.
Thanks
Confused novice here looking for answers! Hopefully my logic on the below is correct but you never know with mortgages/finance...
We bought a flat 4 years ago for £200k. We borrowed £175k on the mortgage with the other £25k in deposit.
Next year we are looking at moving on and buying a new place. We have paid off £5k of the mortgage (depressing!!), so have £170k left. However the value of the flat has gone up and we expect to be able to sell for say £250k. We also expect to have an additional cash deposit of say £20k.
In addition to the £20k deposit, I believe we will have approx £80k of what I would now call capital (£25k from original deposit, £5k of mortgage paid off, and £50k of added value on the flat).
Is that right? Or am I barking up the wrong tree completely?!
Any advice would be much appreciated.
Thanks
0
Comments
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If you sell for £250k, you repay your £170k mortgage and have £80k residual equity. You then put some savings to that, giving you £100k to cover the deposit on your next home and to pay the costs of moving, of course.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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Incredibly useful, and so simple when explained like that. Thank you kingstreet!0
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Note that the word 'deposit' covers 2 different issues
- A deposit paid to your solicitor and held as a deposit of good faith on exchange of contracts
- The equity the buyer puts into his purchase.
You might as well ask the Wizard of Oz to give you a big number as pay a Credit Referencing Agency for a so-called 'credit-score'0 -
If the mortgage interest rate is higher than you are earning on your savings then may be worth overpaying the mortgage. Help cover the purchase and sale costs. As will run into many thousands of pounds.0
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