Trying to move up property ladder

Vic5

Hi Everyone,

We're thinking of moving and I'm wondering exactly how we can afford to. We bought our house for £160k with a £150k mortgage. Our house is probably worth max £220k (planning to get it valued in the New Year). I think we have about £138k left to pay on the mortgage.

If we sold for £220k is that the maximum we could buy for? We don't have any other savings. I know it seems like a silly question, just not sure how equity works and the money we've already paid.

What other ways can we increase the amount we can buy? Our 10-year fixed rate ends next December and we're hoping we'll be able to get a new deal with a lower rate than the 5.99% we're on at the moment. However, I'm also concerned that as we're now on one salary, due to me mainly being at home with our children, this will go against us.

Any tips for moving up the property ladder will be greatly appreciated.

Many thanks and Merry Christmas:)

p00hsticks

Vic5 wrote: »

Hi Everyone,

We're thinking of moving and I'm wondering exactly how we can afford to. We bought our house for £160k with a £150k mortgage. Our house is probably worth max £220k (planning to get it valued in the New Year). I think we have about £138k left to pay on the mortgage.

If we sold for £220k is that the maximum we could buy for? We don't have any other savings. I know it seems like a silly question, just not sure how equity works and the money we've already paid.

If you sell for £220k and owe £138k this will leave you £82k once your exisitng mortgage is paid off. If you have no savings then the selling costs and the purchase costs of the next property will need to be taken out of this and what you're left with (say around £77k) becomes the deposit for your next property. How much mortgage you can get with that sort of deposit will depend on your (OH's) income ....

Vic5

Right, OK, thanks a lot for your reply. I guess I was assuming our mortgage would just continue as it is, but I suppose changing rates requires all the admin again.

What if we move before our fixed rate ends? Then our income wouldn't be an issue for the bank?

Thanks...

Spidernick

I think you'd need to check that the mortgage is portable with no penalties involved and if you are borrowing more money (which I assume is the case rather than moving to a bigger house in a cheaper area) then the lender is always going to want to know about your income. The new mortgage interviews introduced recently seem to be extensive, with three hours the norm by the sounds of it (thankfully I haven't had to have one of these, but have friends who have).

Do you need to move because of the kids making the house seem small? If not, you might want to wait until such time as you are working again (if that is the plan), as you might struggle to get enough of a mortgage for a significant step up at present and, as #2 points out, moving is expensive.

Vic5

Thanks very much. A few things to think about... Yes, we need to move for more space. Not after a mansion, just a bit more room. I do intend to go back to work but not sure when that will be.

Thanks again.

spiritless

in our recent experience, any changes to your mortgage (remortgage, moving or porting) will involve affordability checks. Given your circumstances have changed this could be an issue.


Don't give up though, speak to a mortgage adviser and get the facts then you can make a plan. We're doing this currently- our plan is to move in 2017 as by then we'll have saved a bigger deposit (currently just recovering from negative equity) and be in a stronger position to get a good deal on a mortgage...something that hasn't been possible since we moved here in the height of the property boom.

amnblog

Spidernick wrote: »

I think you'd need to check that the mortgage is portable with no penalties involved and if you are borrowing more money (which I assume is the case rather than moving to a bigger house in a cheaper area) then the lender is always going to want to know about your income. The new mortgage interviews introduced recently seem to be extensive, with three hours the norm by the sounds of it (thankfully I haven't had to have one of these, but have friends .

Whether you are raising extra funds are not, a new property means new underwriting on the new mortgage.

You need to establish what your options are for taking your current rate to a new property, and any penalties if you do not, or cannot do so

Three hours interviews are the exclusive benefit of direct to lender applications, use of a mortgage broker will avoid this aggravation.

Vic5

Thanks both. I think we really need to get a valuation and then go and see our mortgage lender to see what they say.

Thrugelmir

Vic5 wrote: »

Any tips for moving up the property ladder will be greatly appreciated.

With am interest rate of 5.99% overpay your existing mortgage by whatever is affordable. With the proviso of not incurring any early repayment penalties.

Lenders will use a higher rate than 5.99% to assess affordability. Irrespective of whatever the actual product interest rate is. So if moving is your dream. You need to do some of the heavy lifting yourselves.

onlylookingforaquietlife

with a mortgage of 150k at 5.99% over the last nine years your figure should be closer to 118,000 than 138,000

Vic5

Thrugelmir wrote: »

With am interest rate of 5.99% overpay your existing mortgage by whatever is affordable. With the proviso of not incurring any early repayment penalties.

Lenders will use a higher rate than 5.99% to assess affordability. Irrespective of whatever the actual product interest rate is. So if moving is your dream. You need to do some of the heavy lifting yourselves.

Thanks for the advice.