How does this work?

JohnLock

basic question ...

Say you took out a mortgage for a house worth 80k in 2000.

Today that same house is worth £300k, does your monthly mortage also increase?

Or is the increase in house price pure profit which you can pocket?

Basically, if house prices increase during the period you have a mortgage, do your mortgage payments also increase proportional to house price increase?

Thrugelmir

JohnLock wrote: »

Basically, if house prices increase during the period you have a mortgage, do your mortgage payments also increase proportional to house price increase?

No.

Your mortgage payments will reflect the amount required to clear the outstanding debt by the end of the mortgage term. Based on the prevailing interest rate at the time.

ashe

No, your mortgage is on the 80k, and you continue to pay that amount until its paid off.

However if you sell the house for 300K, you pay the outstanding balance and pocket the difference as profit to use as you see fit, e.g towards the next house.

What controls your mortgage payment is the interest rate, assuming you are not on a fixed rate deal.