Buying house, selling and interest rate

tashabel

Hi,

I was wondering if someone would be kind enough to explain to me the process of buying a house and then selling it on?

If I bought a house, say for £60,000 (deposit is £6000) borrowed money from the bank is £54,000 and I sold it 2 years into the 25 year loan amount, would I need to pay for the 25 year interest rate as well as the loan amount? Or would I only pay for the interest rate of the 2 years and the loan amount?

Thanks

sparky130a

What. Actually what?

alex_163163

So when you sell it would very basically be the following:

Initial mortgage amount (£54k) + interest accrued up to the point of sale - amount repayed up to the point of sale
(Not accounting for any early repayment charges if applicable etc)
It's not quite as simple as that in reality with the way the interest is calculated, but it's the general idea I think.

G_M

EXAMPLE

* bought a house for £60,000
* deposit is £6000
* borrowed money from the bank is £54,000

* monthly repayments £246 pm ( interest & capital)
* repayments paid after 2 years £5,904

* sold after 2 years for say £70,000
* outstanding debt £51,000
* estate agent fees £1,400
* legal fees £700
* Equity after sale £17,000

Original length of mortgage is irrelevant but assumes the mortgage product chosen has no early repayment /redemption penelties.

There would inevitably be some additional sundry costs.

eddddy

Your monthly mortgage statement (or online mortgage account) will probably tell you exactly what your mortgage balance is.

If you sell, you will need to pay that balance back.

(Assuming you have a 'repayment mortgage', that balance should be less than you originally borrowed.)

However, if you're selling after only 2 years, there may be an early repayment penalty to pay as well.

tashabel

Thanks so much all! Really helpful : )