Selling One House, Buying Another - How Does It Work?

User36750

Explain it like I'm five here...  I'm not sure how it works.

We bought our house for £140,000.
It's now worth around £220,000.
Mortgage is at about £110,000.
We have 19 years left.
We have a combined salary of around £50k at the moment.

What sort of prices should we be looking at for our next home that wouldn't saddle us with a huge monthly cost?
Can we use some equity as deposit money?
I know some mortgages don't allow you to port them to new properties, so how does it work with changing mortgage?

RAS

You might need to start by reading your existing mortgage contract. Are you in a fixed term? Can you port your existing mortgage? 

How much do you have saved towards legal and EA fees, and SDLT? As that will have to come out of your equity, otherwise.

TheJP

You have £110,000 as a deposit on your next house (or less if you want to keep some of that equity for renovations/debt/holiday etc). Are you on a fixed term product? If so how many years remain? The price of house you can look for depends on how much you want to borrow additional on top of the £110,000 you owe. If you want to buy say a £300,000 house and use the equity as the deposit then you would need an additional £80,000 mortgage.

Its best to check what the prices are of the type of house and area you want then check your affordability and whether you can port and borrow more.

Martico

"What sort of prices should we be looking at for our next home that wouldn't saddle us with a huge monthly cost?"

That depends to a large extent on your spending habits. Do you like expensive holidays / have high travel or other living costs? Do you save a lot for the future? So many variables that are personal to you. The £50k joint salary is a start, but you also need to work out what level of non-mortgage spending is good for you, before you factor in a mortgage. 

You'll just need to sit down and budget on that kind of thing, really. Very very simplistically, you have a £110,000 deposit to put towards your next property, less a chunk for moving costs, stamp duty, potential mortgage redemption fee if you're within a fixed period and can't port (I think). Get to a mortgage calculator and play around with the numbers. 

User36750

TheJP said:

You have £110,000 as a deposit on your next house (or less if you want to keep some of that equity for renovations/debt/holiday etc).

If you want to buy say a £300,000 house and use the equity as the deposit then you would need an additional £80,000 mortgage.

So we'd add the £80,000 to the mortgage money we already owe?

Thanks for the starting numbers - it's just what I need   I appreciate others have asked particular questions but I simply need to know where to start rather than getting right down to the detail, which is what I can do now I know where I stand.

eddddy

User36750 said:

So we'd add the £80,000 to the mortgage money we already owe?

To be more accurate - you'd pay off your £110k mortgage and take out a new mortgage of £190k.


Is your mortgage portable?

If it's portable, you should be able to keep the same interest rate for the first £110k of the new mortgage - and pay 'a new interest rate' for the remaining £80k.

If it's not portable, you'd pay 'a new interest rate' for the whole £190k.


The 'new interest rate' might be much higher than your existing interest rate - it depends what deal you have already got, and what new deals are available.

propertyrental

https://www.waterstones.com/book/buying-and-selling-your-own-home/frances-james/9781802360264

https://www.waterstones.com/book/buying-a-home/paul-jager/sue-lehmann/9780716023371

https://www.waterstones.com/book/buying-and-selling-a-home-for-dummies-2e/mb-bien/9780470994481