Moving house questions
Discussion
We currently have a flat that we purchased last year. Paid £125,000 for it. £117,250 was with a mortgage.
We are looking at moving in around three years. We will have around £107,000 left to pay.
Our finances will be better as well. I'd have two loans paid off that I had when we got this mortgage which effected how much we could get last year. I'd have had a couple of pay rises then as well.
My girlfriend would have had paid off her car finance as well and once she finishes her course will have a nice pay rise.
Joint income will be around £55,000 to £60,000 (plus overtime).
How does it work when we move? If we can get a mortgage for £250,000 for example how does it work for any deposit?
We would have around £18,000 in equity from our flat. Would that be used or would we need to put any extra in if the mortgage company want 10% for example.
I hope that makes sense!
We are looking at moving in around three years. We will have around £107,000 left to pay.
Our finances will be better as well. I'd have two loans paid off that I had when we got this mortgage which effected how much we could get last year. I'd have had a couple of pay rises then as well.
My girlfriend would have had paid off her car finance as well and once she finishes her course will have a nice pay rise.
Joint income will be around £55,000 to £60,000 (plus overtime).
How does it work when we move? If we can get a mortgage for £250,000 for example how does it work for any deposit?
We would have around £18,000 in equity from our flat. Would that be used or would we need to put any extra in if the mortgage company want 10% for example.
I hope that makes sense!
Generally speaking the sale price minus the remaining mortgage will be the equity you can use for a deposit on the new house, you can top this up if you want to decrease your LTV or to meet the min requirement from your lender.
I would be careful calculating the equity you think you will have as a lot can change with regards to house prices in 3 years, friends with flats have taken a bit of a beating recently in order to attract buyers to theirs instead of the new build flats with HTB.
I would be careful calculating the equity you think you will have as a lot can change with regards to house prices in 3 years, friends with flats have taken a bit of a beating recently in order to attract buyers to theirs instead of the new build flats with HTB.
As Worsy said you need to cover all the other costs as well, either from your equity or from savings.
In your example if your property was still worth 125k and you owe 107k on the mortgage you have equity of 18k.
You will need to look to see what you can borrow based on your salaries. If you can borrow 250k, then theoretically you can buy a property of 268k. (250k mortgage, 18k deposit from your equity, assuming you pay estate agency fees, legal fees etc from savings)
However,
Your loan to value in this scenario is to high and you will not get a mortgage offer. Most lenders are capped at 90% LTV at present.
So to buy a property of £268k you will need a deposit of £26,800.
The maximum you could mortgage up to with your current equity would be a purchase price of 180k with 18k down as the deposit.
Obviously if you have more savings this will change things or if the equity is higher (property worth more or mortgage remaining is less)
You will also want to check you have no early repayment charges on the current mortgage when you come to sell.
In your example if your property was still worth 125k and you owe 107k on the mortgage you have equity of 18k.
You will need to look to see what you can borrow based on your salaries. If you can borrow 250k, then theoretically you can buy a property of 268k. (250k mortgage, 18k deposit from your equity, assuming you pay estate agency fees, legal fees etc from savings)
However,
Your loan to value in this scenario is to high and you will not get a mortgage offer. Most lenders are capped at 90% LTV at present.
So to buy a property of £268k you will need a deposit of £26,800.
The maximum you could mortgage up to with your current equity would be a purchase price of 180k with 18k down as the deposit.
Obviously if you have more savings this will change things or if the equity is higher (property worth more or mortgage remaining is less)
You will also want to check you have no early repayment charges on the current mortgage when you come to sell.
Edited by BobbyA on Friday 13th November 17:21
. Gassing Station | Finance | Top of Page | What's New | My Stuff