embarrassing question about principle of mortgage

dk67

hello,

wondering if anyone can help with this query ...

we have a property worth around 190k and a remaining mortgage balance of 47k.

we would like to relocate and are estimating how much we could afford to spend on a new property ...

looking at the above , does this mean we have 190k + 47K available? - ie: is the 47k that we owe the bank available as money towards a move? or would the bank need us to repay the 47k from the 190k and get another mortgage?

we are looking to spend around 230k on a new home.

sorry this is probably such a basic question - this is our first foray into the house market - and i have a headache!!

thanks. really appreciate any answers

sooz

you have £190 minus the outstanding mortgage of £47 available. You will have to pay this back and arrange a new mortgage.

Tyders

Edit: Brain hurts after doing HIPS all day. must re think answer when can remember own name. lol. dont want to mislead you.

cm233lh

You're going to have to repay the 47k to clear the mortgage. That will leave you with about 143k depending on the actual price you get less costs (which will be considerable!). So you'll need to find another 90k plus the costs, which you could finance out of a mortgage on the new property, assuming a lender is happy with your circumstances.

kodokan

You would sell the house (let's say for £190k), and on completion your solicitor would deduct £47k and send it to the mortgage company, £xx to pay your estate agent's bill, assuming you used one, and £xx to pay their own legal fees (which would be around £500-£700 for a straightforward sale - any other purchase would be extra). They would then send you the balance, usually as a bank transfer.

Don't forget to also deduct moving costs (it sounds as if you're moving area, so a DIY job may not be possibly/ advisable), legal costs for purchase and stamp duty on the new house. Oh, and the mortgage arrangement fee for the new property, anything from £0-£1500 depending on the interest level and length of deal.

Take the leftover figure, add it to your maximum comfortable borrowing - which may not be quite the same as the amount they'll lend you - and da da! That's how much you can spend on your new place.

HTH

kodokan

dk67

thanks for the quick answers ...

but im still a bit confused!

one of you says pay the outstanding amount off first - and another says transfer it ....

hope i have understood this correctly ... could you elaborate please?

so sorry ...

Jockthearab

When you sell your house your solicitor will pay back your current mortgage provider from the proceeds of the sale. You don't have to pay it off before the sale goes through if that was what you were thinking! As mentioned above you will have a tidy sum of approx £143 000 that you can use as a deposit towards your next home. IF you wanted a house costing £230 000 you would need a mortgage to cover the difference in price from what you have as a deposit i.e approx £97 000. This £97 000 is what you have to establish whether or not you can afford it. Also if you are moving into a larger property there may be increased gas/electric costs, increased council tax, house insurance, travel to work etc to be budgetted for.

Good Luck!

surfcat

Surely this is a wind up right?

Zammo

Raofpmsl!!!!!!!!!!!!!!

Snow_Dog

Sell house for £190K

Pay off mortgage of £47K, leaves you with £143K in your pocket

Find nice house with roses over the door for £230K, you need to borrow £87K in the form of a mortgage.

Clear as mud.

And yes it does appear slightly windupish.

dk67

actually it isnt a wind up!

i really am not sure exactly whether an outstanding mortgage needs to be repaid before another is taken out.

believe me - this seems a silly question, but when you are experiencing unexpected and tragic difficulties in life, you sometimes lose the ability to think as rationally as you usually do!

so thanks very much to all those who took my query seriously and took the trouble to answer - this is surely the essence of mse and your help is much appreciated.