Help please

Salwayash

Hi, I need some advice please. I have a 10 year fixed mortgage at 2.34% with 5 years to go, My original mortgage was for 145k on a purchase of 225k. My outstanding mortgage left today is 91k. My current house has been valued at between 280k and 300k. 
 We are looking at downsizing to a smaller property. I have checked and  my mortgage can be ported to a new property. 

The new bungalow is 240k and as I say I’m hopefully of porting my 91k mortgage. I would just like to know how much equity/money I would end up with if we were to get 280k for our house ignoring all costs involved? I hope that makes sense regards Paula 

tacpot12

If you get 280k for your current home and have a 91k mortgage, your equity/proceeds of sale are 189k.

If you go ahead with the purchase of the new bungalow, you would normally put the 189k into the purchase and reduce the mortgage to 51k. If you keep the mortgage at 91k you would have 40k cash left, but would be paying more interest over the life of the mortgage. 

grumpy_codger

It's a fixed-rate mortgage, so reducing it to £51K will most likely incur ERC.

Even if not, with 2.34% rate it makes more sense to put £40K cash to a good savings account instead of reducing the mortgage balance.