Downsize for no mortgage?

JillsDaughter

Hi, It's been a while since i last posted on here so please bear with me if i get anything wrong ;-) I'm not sure if this belongs here or on the mortgage board...
I'm thinking about selling our 3-bedroom house and buying a 2-bedroom apartment. I've been considering all the pros and cons so don't necessarily need any advice about actually making that move (although opinions always welcome!). What i do need to know is about managing the finances for this. Value on our house is £235k,asking price for apartment is £169k, even allowing for £10k of fees and stamp duty etc we could potentially walk away with around £56k cash and currently we have a two-part mortgage of £56k so I might just be mortgage-free which would be a massive and welcome lifestyle change and stress-relief.
The apartment would need some work including new boiler and bathrooms and no doubt I'd want to update the kitchen so my question is really wether i'd be better off porting the existing smaller mortgage (or should i shop around, how good a deal could i get on a £10k mortgage -is there a minimum?), or should I pay off the mortgage in it's entirety and take out a personal loan for the work that ideally i'd want doing straight away? Would not needing a mortgage make the buying process easier?
TIA for your help.

hazyjo

Usually around £30k min for a mortgage. You'd be much better with a loan IMO.


I did a similar thing. Sold for just over £515k and bought for £430k. Moving costs were around £20k. Only have a £50k mortgage now which is lovely. Wanted to have nil, but prices were rising quickly where I bought.


With an apartment, bear in mind it will be leasehold so you will want to make sure the lease stays topped up. You don't want it dropping below 80 years really. Not particularly cheap to do. You will also prob have service charges/ground rent to pay regularly and may have to ask permission from the freeholder if you want to make any structural changes.


Are you sure you'll be that much better off (considering expenses, loan/interest, service charge, lease renewal, etc)?

saajan_12

JillsDaughter wrote: »

Hi, It's been a while since i last posted on here so please bear with me if i get anything wrong ;-) I'm not sure if this belongs here or on the mortgage board...
I'm thinking about selling our 3-bedroom house and buying a 2-bedroom apartment. I've been considering all the pros and cons so don't necessarily need any advice about actually making that move (although opinions always welcome!). What i do need to know is about managing the finances for this. Value on our house is £235k,asking price for apartment is £169k, even allowing for £10k of fees and stamp duty etc we could potentially walk away with around £56k cash and currently we have a two-part mortgage of £56k so I might just be mortgage-free which would be a massive and welcome lifestyle change and stress-relief.
The apartment would need some work including new boiler and bathrooms and no doubt I'd want to update the kitchen - if any of this is major works without which the property is uninhabitable then it may make getting a mortgage harder. so my question is really wether i'd be better off porting the existing smaller mortgage - you'd still have a valuation fee on the new house. (or should i shop around, how good a deal could i get on a £10k mortgage -is there a minimum?- minimum aroudn £25k for a new mortgage, so this isn't possible. plus proportionately you'd pay loads for arrangement + valuation fee even if they let you. ), or should I pay off the mortgage in it's entirety and take out a personal loan for the work that ideally i'd want doing straight away? - if you must do it immediately then yes, take a loan, but is there no way you can wait?Crazy taking a loan for non essential works.. Would not needing a mortgage make the buying process easier? YES - solicitor choice not restricted to lender's panel, no mandatory searches / surveys for the lender, only what you choose, no time delay in waiting for mortgage offer (new offer or offer to port)
TIA for your help.

Definitely don't get / port a £10k mortgage. Pay it all off and take out a persoanl loan if you must. Though ideally wait to do the work when you can afford it and leave the loans / borrowing capacity for unexpected essential repairs).

With no mortgage / porting:
-> Can choose any solicitor, not restricted to lender's panel
-> No time delay waiting for mortgage offer
-> No valuation / mortgage application fee (£500-2000)
-> No surveys / searches to protect the lender's interest, only pay for the checks you want.

Smodlet

Just wondering, have you ever lived in an apartment before? Different world from being in a house, usually. Noise from neighbours, especially directly over you, should this apply. Sounds like the worst kind of move I can imagine but to each, her own.

busybee100

Hi Jill'sDaughter
We're doing similar. I would save and do the work gradually. It's much easier to save large amounts once you have no mortgage and you could use some of the interest free options for kitchens and credit cards.

ReadingTim

What's the big deal with being mortgage free? Sure, it's nice to own your own home, and yes, it can be a pretty big bill every month, but it's not the only bill you've got to pay - there are plenty of others. BT will cut your phone off far faster than a bank will repossess your home if you don't pay the bills.... Flats may have service charges, ground rents etc too.

Unless you're approaching retirement or money's really tight, I can't believe it's that stressful. Selling up and living in a flat just to have a couple of more holidays a year or work a bit less seems a little short-sighted too - I paid off my mortgage in August 2014 and it hasn't vastly improved my life - in fact I'm looking at getting another in order to upsize!

JillsDaughter

Thanks all for your replies so far, especially saajan_12 who has given me the sort of information i was after!
So, the cost of moving would be a little bit less than the £10k i had in mind if I don't have mortgage fees and can reduce the number of searches which would mean i could start updating some things straight away and save for others as busybee100 suggested. The apartment is perfectly habitable right now, I'd just want to put my own stamp on it and bring some things up to date.
I won't be better off in terms of assets, but will be in terms of not having that huge monthly payment which will enable me to get the right balance between saving for the future / retirement and living a different life than i currently do. I don't really enjoy the house or the area i live in at the moment so don't want to be here for another 8 years.
Would everything be dealt with by conveyencers / solicitors? At what point would the mortgage company be informed that I'm paying off the mortgage and no longer intend to own the property thats mortgaged - would I need to do that?

Thrugelmir

JillsDaughter wrote: »

At what point would the mortgage company be informed that I'm paying off the mortgage and no longer intend to own the property thats mortgaged - would I need to do that?

When you sell it. The mortgage charge will have to be released.

Smodlet

JillsDaughter wrote: »

Thanks all for your replies so far, especially saajan_12 who has given me the sort of information i was after!
So, the cost of moving would be a little bit less than the £10k i had in mind if I don't have mortgage fees and can reduce the number of searches which would mean i could start updating some things straight away and save for others as busybee100 suggested. The apartment is perfectly habitable right now, I'd just want to put my own stamp on it and bring some things up to date.
I won't be better off in terms of assets, but will be in terms of not having that huge monthly payment which will enable me to get the right balance between saving for the future / retirement and living a different life than i currently do. I don't really enjoy the house or the area i live in at the moment so don't want to be here for another 8 years.
Would everything be dealt with by conveyencers / solicitors? At what point would the mortgage company be informed that I'm paying off the mortgage and no longer intend to own the property thats mortgaged - would I need to do that?

Thrugelmir wrote: »

When you sell it. The mortgage charge will have to be released.

You apparently have a mortgage so you did once buy a property, right?

Cornucopia

JillsDaughter wrote: »

Would everything be dealt with by conveyencers / solicitors? At what point would the mortgage company be informed that I'm paying off the mortgage and no longer intend to own the property thats mortgaged - would I need to do that?

Yes, it will all be dealt with by Solicitors/Conveyancers. Mortgages are intrinsically linked to the property that they relate to (so you cannot retain the Mortgage once the property is sold). "Porting" is the exception to this, but that is an additional process.

One thing I would suggest (from experience) is to share your figures with your Solicitor early on, so they understand what you are trying to do, and can report back on any issues with it.