What should the proceeds amount be after porting mortgage, so confused on this

MicaF

Hello All, I have sold my main home and am buying another main home (so no CGT) and porting my mortgage to a new property. I am very confused as I don't know what the total proceeds returned to me will be. The sale amount (after paying all the solicitor/estate agent fees etc) is 500,000, the mortgage amount is 115,000 and that is being ported, (the sales solicitor redeems it to bank then the purchase solicitor draws it down and puts towards my next purchase). The next purchase costs 290k including all taxes and fees.
So out of my proceeds I need to give the next solicitor 175,000. So my question is: is the amount (ie proceeds) sent to me after everything is done 325k as I have not paid off my mortgage and have just ported, so the only subtraction from the sale price should be 175k  or is it for some reason 210,000 because I have to subtract the 115,000 and the 175,000 from the proceeds. Very confused please can someone clarify what the proceeds amount is likely to be? thank you!

Annisele

I think it's easiest to think of this as two separate transactions. If you first pretend that you'd sold your house without intending to buy another one, you'd have ended up with £385k in cash:

• You'd sell a house and get £500k of cash, then
  
• You'd repay a mortgage of £115k.
• So you'd end up with cash in your hands of £385k (£500k - £385k).

Now assume you take your £385k of cash and decide to buy a brand new house worth £290k, partly with cash and partly with a brand new mortgage. In that case, you'd make up the purchase price like this:

• A payment of £175k (cash that you'd have to give your solicitor out of the £385k you got from selling your old place) plus
  
• A mortgage of £115k.

So, the amount of cash you're going to end up with in your hands is going to be: £385k (the total amount of money you had after selling your old place), less £175k (the equity tied up in your new house). So your solicitor will pay you £210k.

(If your solicitor sent you £325k after everything was done, then you'd have ended up with: £325k of cash, £290k of newly purchased house, less £115k of mortgage. So the value of your cash plus house would be £500k. That would only be correct if you'd started out mortgage free then taken a new mortgage for your new house.)

MicaF

thank you kindly!!