Moving House

johnwilsonuk

Hi,

We're in the processes of selling our first house and looking to move to somewhere new.

Our current mortgage has £130,000 left to pay, and we are half way through our fixed rate term. The fee the mortgage company we have to pay should we wish to leave this term would be £3,000.

We've accepted an offer of £160,000 on our current property and have found a house we're interested listed at £125,000, but it needs some work doing to it which we'll need to fund.

We don't have a clue how mortgages work with regards to selling, porting or capital etc...

Can anyone help, explain the situation we're in and what money we would be able to free up if any, as we would like to invest in back into the new property.

Thanks,
John

amnblog

You are selling at £160,000 but still owe £130,000 plus estate agents fees and legal costs.

That leaves you with perhaps £25,000 cash.

Your costs to buy at £125,000 may be around £1,500.

This leaves you up to £23,500 plus any extra cash to put in to the new property.

You now need to decide how much to put in and how much to keep back.

Let's say to put in £12,500 deposit and borrow £112,500 on your new mortgage.

If your current lender will do the new mortgage for you, then you only pay a redemption penalty on the difference between your current mortgage £130,000 and the new one £112,500.

Perhaps £650 fee rather than £3,000.

I hope that all make sense?

johnwilsonuk

Thank you @amnblog, makes perfect sense :-)

TBagpuss

Speak to your current lender to find out what your options are. As anmblog says, they may be prepared to waive the ERC or charge you less if you stick with the same lender- i's also possible that they'd let you port your current mortgage to a new property, although as you are buying for less than your current mortgage amount you would be partially paying down the mortgage which may attract an ERC depending on the terms of the current deal.

Worst case is you pay the ERC which would mean that you'd have around £20,000 after paying you estate agents, ERC,and legal costs. Some of that you'll need to use as a deposit for your new property, and what % of the property value you pay as deposit will make a difference to what mortgage deals you can get - generally speaking,you'll get better deals if the deposit is higher.

What works do you plan to do to the new property and what will they cost? How urgent are they? (e.g. could you use all/most of your equity as a deposit and then save for the repairs, or are they so significant that the lender is likely to make a retention until they are done? )

If you put a 10%deposit down, of £12,500 you'd have about £7,500 to start to do the repairs. Is that going to be enough?