- April 3, 2024
- Posted by: legaleseblogger
- Category: Related News
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## Doubling the Original Content:
I hope this is the correct place to post and apologies for what is probably a stupid question in advance…
In short, I currently own a flat and would like to move up the ladder and buy a house.
I appreciate I can’t get mortgage advice here and I will seek it professionally, however I do have a question I’m a bit embarrassed to ask which I’m hoping you can help with first.
Back of a fag packet calculations here…
For example, my flat is worth £300k and my remaining mortgage is £200k.
The house I’d like to buy is £400k and I have a mortgage in principle for £310k – am I right in assuming I make up that missing £90k out of the £100k profit (equity?) I’ve made on my flat?
Appreciate there are various fees to take into account etc – I just want to make sure I understand it correctly as at the moment, I’m basically unsure of what price range I can look at for houses.
Thank you in advance for anyone that replies.
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****** just grabbed a
Yes you are right.
I don’t know what else I can say but I need to say enough words so I the auto mod doesn’t get angry
The easiest way to think of it is two separate transactions, they just happen at the same time.
Sell yours for £300k, pay off the £200k mortgage, you have £100k cash.
Put down £90k for new place, with the £310k mortgage you have the purchase price. £10k left for whatever.
I’m inferring that this would be your second house purchase.
The basic idea is yes. There are a couple of additional things you’ll need to familiarise yourself with which may make a difference.
* As you’re no longer a first time buyer, you’ll need to pay stamp duty. On a 400k house, that would be another £7500. The [formula](https://www.gov.uk/stamp-duty-land-tax/residential-property-rates) in the relevant range is ((price – 250000) * 0.05)
* You’ll need to have a close read of your current mortgage Ts & Cs. You might be able to “port” it to the new house, which would be particularly nice if you were lucky enough to have a long fix at a low interest rate. On the other hand you might get stuck having to pay extra in early repayment charges if you’re leaving part way through your fix.
* It is common (although not strictly required) to have a “chain” where everyone buys/sells at once. The main implication of this is that things can fall through and you need to be prepared for that. A minor implication is that if you’re waiting on your sale to get the bulk of your money, you’ll need an extra pot accessible for earlier fees.
* Perhaps most importantly, your house value is an estimate. (So is the one you’re buying of course, but you’ve probably at least played the haggling game in that direction already) The main implication of this is don’t leave things too tight.
If you sell your flat for £300k, and pay the £200k mortgage, you will have about £100k left (minus a bit for fees etc).
To buy a house for £400k, with £100k of savings, you will need a £300k mortgage. If you have more savings you can use, you can reduce how much mortgage you borrow. Or if you want to take out a larger mortgage (and can afford it) you can do that and the surplus from your old flat will arrive as cash in your bank account.
Hi /u/Fantastic-Habit-6675, based on your post the following pages from our wiki may be relevant:
* https://ukpersonal.finance/tax-traps-and-tax-efficiency/
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Ex broker. Fine. Remember about fees and SDLT etc. Also the mortgage should preferably be without early repayment charge or you might need to weigh up porting your existing DEAL where at least you receive the ERC back after a few weeks from completion.