Trying to understand moving up the property ladder, looks like I made a mistake in the first place

penners324

The deposit comes out of the £120k. Difference between selling and mortgage value.

Less fees and stamp duty

lookstraightahead

But you're spending your equity. Also don't move so fast, and definitely from 2021 when house prices were high and interest rates were so low. 

Sg28

Theres no such thing as a property ladder in reality. 

If prices rise it makes the difference in price between your house and the price you are buying bigger. 

Say you buy for 500k and at the time the next house on the "the ladder" is 700k. (200k difference)

Prices rise 20% and you want to move. Your house is now 600k (100k "profit") but the new house is now 840k. You now need to find/borrow 240k plus fees stamp duty. 

You may have a benefit from the fact you have paid off some of your initial mortgage and built more equity, or that your pay has increased in that time so can borrow more. 

1122abc

House_owner said:

You sell your house for 600k, you pay back the mortgage of 480k, you are left with 120K. 
Take away from that the estate agent fees for selling, the solicitors fees for selling and buying and the likely stamp duty on the next house and that is how much you will have available as a deposit on your next house.

Sorry I’m a little confused. I think that 120k will not be available to me as I will need a larger mortgage?

1122abc

Thanks all. I understand that I should stay in the property longer. However I’ve outgrown it and I now need a larger outdoor space for my dog. 

Flugelhorn

1122abc said:

Thanks all. I understand that I should stay in the property longer. However I’ve outgrown it and I now need a larger outdoor space for my dog. 

good luck with moves they can be very stressful and hence why most people don't move very often (along with the fact that stamp duty is paid and "lost" each time and can be a significant sum these days)  With pets  probably people would just find public places to walk the dog. It is a bit like people wanting larger gardens for the kids who actually are only interested in playing in them for few years then spend most of their time elsewhere or indoors. 

MultiFuelBurner

1122abc said:

Thanks all. I understand that I should stay in the property longer. However I’ve outgrown it and I now need a larger outdoor space for my dog. 

As per you other post on this.

Expensive dog lol

I disagree with people dismissing the term property ladder though.

We have moved up and then back down, releasing equity to buy property rentals then back up as we chose houses we could add value to. We have down this and made it work in the rising markets and choosing areas well....as well as a good dollop of luck.

Exodi

1122abc said:

I’m not sure what I’ve benefited from getting on the property ladder in the first place since my initial deposit was 87k. I should have just  continued saving, bought my “forever” home in the first place and saved on the stamp duty and hassle of a chain. 

I'd say buying a house and relatively soon after (2 years) thinking about selling it probably wasn't the wisest decision - as you say stamp duty (and EA costs) will lap up any benefit.

ThisIsWeird

It's more a case of property snakes and ladders; a lot depends on how fortunate your timing is, and that is largely pure luck.

That was quite an expensive first buy, 1122! Was there a reason for this - are you in an expensive part of the country? Or did you just fancy living in a particularly nice 'hood? Looking back, if a significantly cheaper place had been available, imagine how much additional 'deposit' you could have saved over the past 2 years for your next move. I mean, if you could have seen into the future, you could have minimised your first property mortgage amount by buying a cheaper place, knowing that prices were at an all-time high and were bound to fall again, and ploughed the rest of your earnings into high-interest savings, since you could have foreseen that the current high interest rates were also just around the corner...

No, nor me.

Snakes and ladders. I think what's happened to house prices over the past 5-odd years has defied pretty much every expectation. It's just been nuts.

Anyhoo, you will undoubtedly have quite a few more moves in your life, and this one will just be a story to tell of your journey.

grumbler

Sg28 said:

Theres no such thing as a property ladder in reality. 

If prices rise it makes the difference in price between your house and the price you are buying bigger. 

Bigger, but but still smaller than betweeh "the price you are buying" and zero/nothing.

If prices rise "such thing as a property ladder" exists an makes perfect sense. It's just the STD and the fees that limit the frequency of you steps up the ladder.

Say you buy for 500k and at the time the next house on the "the ladder" is 700k. (200k difference)
Prices rise 20% and you want to move. Your house is now 600k (100k "profit") but the new house is now 840k. You now need to find/borrow 240k plus fees stamp duty. 

To make it simple, let's say you are a cash buyer and use your savings. You have 500K, but want the 700K house.

Ignoring the STD and the fees, the new house will cost you (you spend it total):

• 840K -  if you wait for 2 years to save more (you have 500K need to save 340K).
• 500K+(840K-600K)=740K - if you don't wait and buy a smaller house to 'get on the ladder' (you spent 500K and need to save 240K)
  

As simple as that.