Want to move but not sure if I can

hufc2002

Hi all

We bought our house for £107k at the back end of 2007 and took out a 100% mortgage.

The mortgage was initially fixed for 5 years and we are now on the lenders variable rate (1.99% above the base rate).

We would love to move however our house is never going to be worth what we paid for it and there is currently a similar house a few doors along for sale priced at £90k.

We have been overpaying on our mortgage by an additional £220 per month for the last 12 months and I think we currently owe just shy of £100k.

I currently have approximately £14k in savings also.

Taking all of the above into account, what is the possibility of us being able to afford to move?

We have seen an ideal house which is listed at £147k.

Thanks in advance

kixxb

I think you've got a bit of a way to go but it's definitely possible.

We are in a similar position - paid £90k for our house in 2006 on a 101% mortgage and have been overpaying the mortgage with balance currently at just under £82k. It's currently on the market for offers over £80k with an offer received of £85k although they are not in a position to proceed but it give us comfort that we can achieve that for our property.

We have about £12k in savings and saving about £1k per month. There is a new development that we'd like to move to but we've got plenty of time and don't have a specific house in mind so are happy to sit and wait and keep saving and overpaying.


Might be the best option for you? Or you could put your house on the market to see what interest you get at say £95k + and if you do sell you could rent in the interim while you save?

hufc2002

Thanks for this.

We are in no real rush to move but just wanted to know that it will be possible in the not so distant future.

Making the overpayments is definitely helping us along the way im sure.

Since moving in we have installed a new bathroom, double glazed the front porch and added a composite door so surely that will help too.

I know we aren't in a great position but compared to some of the people I know we are in a much better position.

Dan-Dan

I would post this on the mortgage sub forum as there are loads of helpful brokers on there that can offer good advice

ReadingTim

I'd chuck at least £10k of your £14k savings into the mortgage - unless they're locked away in some notice account, you're unlikely to be recieving more than 2.5% interest on them, which is what the mortgage is costing.

As well as saving money, that might get you out of negative equity and make calculations on whether you can afford to move a little easier to understand, however, until savings + sale of current house = clearing mortgage on current house + 10% deposit for new house then the short answer is likely to be no.

hufc2002

ReadingTim wrote: »

I'd chuck at least £10k of your £14k savings into the mortgage - unless they're locked away in some notice account, you're unlikely to be recieving more than 2.5% interest on them, which is what the mortgage is costing.

The £14k is currently split between 3 ISA's:
£6k in a 4% fixed rate which matures Jan 2015
£6k in a 2% variable
£2k in a 2.55% variable

Ideally, rather than throwing the majority of this into my existing mortgage, I think I would rather keep it to one side for a deposit i.e. 5-10% and fees and continue to overpay on the mortgage. Is this a sensible idea?

I am going to have a look at my latest mortgage statement when I get home tonight and post on here what the existing balance was (at the time) and hopefully someone will be able to work out how much I owe now.

hufc2002

Just checked my last statement and the balance as at 31/09/13 was £96,233.

Since then I have made 5 monthly payments of £449.21 + £220 overpayment per month.

Is anyone able to calculate what my balance would be now?

ReadingTim

hufc2002 wrote: »

Is anyone able to calculate what my balance would be now?

Suggest you contact the mortgage company for a redemption amount, in the event that there are fees or charges which would be applied in addition to the outstanding balance.

hufc2002

I will contact the mortgage company this week.

Just thought that someone might of been able to roughly work out what I owe now.

It seems that I am now there or there abouts owing what the house is worse, possibly even less.

I will carry on overpaying and saving, just as shame ISA rates are poor at the moment.

pinkteapot

After clearing your existing mortgage, you'll then need to have (available in savings):

1. Deposit for the new house - at least 10% of the purchase price if buying 'second hand', or 5% for some new-build sites where you can buy with a 5% deposit. Might be worth looking into the Help To Buy scheme where I believe you can also buy a second-hand house with a 5% deposit? In any event, 5% of the cost of the new house is going to be the minimum that you'll need.

2. Money for the costs of moving - estate agent fees, solicitor fees, stamp duty, removal costs, etc.

I'd suggest you make a list of all the above, and work out how much you need to save up in total. If your mortgage is down to roughly what your house is worth, then you don't need to use any of your savings to clear the mortgage. With £14k you'll be well on the way to having the above...

TBagpuss

OK - step one - look at sold privces locally. Your neighbour's house is on the mark for £90,000 - what are they realistically going to get for it? Sold prices will give you some idea, also you can get a couple of estate agents in to look at your property and to advise about what you could ask for it, and what you will realistically get.

If you assume that you might get £85,500 (5% under asking price) then you can do youir sums from there:

Sale price: 85,500
3% costs of sale (solicitors, agents etc) 2,565
Mortgage redemption 95,000

Net = (12,065)
Plus Savings of 14,000

Net after sale 1,935

This doesn't factor in costs of moving and legal costs/stamp duty on your new property.

Obviously it may be possible to port your existing mortgage to a new property and borrow additional funds, but whichever way you work out the figures you have the £12,000 shortfall to meet.

I assumed £95,000 for the mortgage by simply taking £220 per month off the original figure you gave - assuming it is a repayment mortgage the actual figure will be a bit less than that so it is only a rough approximation. Are you able to increase your overpayments at all?

Are house prices moving at all in your area?