Help with mortgage amount?

[nevernotstruggling]

Sorry to post in chat just unsure of the correct board.
I want to move to a bigger house in about 12 months. I have a mortgage + help to buy loan but within the 1st 5 years so not repaying it. I reckon I could lose up to £20k on what I paid in total for my house based on current listings on the same development. So my cash deposit and the rough equity I reckon I have paid off is about £23k in total. Does this potentially leave me with about £3k deposit for a new mortgage? Or does it not work like that going from one mortgage on to another? My actual mortgage I took out was only about £136k. I want a new mortgage of about £150k.....I have googled lots of things and can't find the answer

[GeorginaTheGiant]

Yes I think that’s correct from what you’ve said-if the house has gone down in value by £20k then £20k of the equity you’ve calculated simply doesn’t exist anymore. Take the market value, deduct your outstanding mortgage balance and what you’re left with is your deposit. And if it’s £3k then you won’t be able to get another mortgage with that as a deposit, regardless of whether you have an existing property to sell. If it has no equity to use as a deposit then it’s neither here nor there I’m afraid. Also remember legal and moving fees, so that £3k probably becomes zero pretty quickly. Do you have to move or can you stay put?

[nevernotstruggling]

Thank you - I don't have to move it's not life or death and where I live is very affordable for us. I want the dds to have their own rooms is really the only motivation to move really. Even when the help to buy loan kicks in I can pay interest only which is very cheap.

I feel a bit frustrated though. I have been looking at porting the mortgage - only knew the word existed 5 minutes ago!

[nancyjuice7]

How much was the house, how much did you pay cash deposit and how much did you get help to buy loan?

You have to pay back 20% of what the house is worth, it it's went down in value you pay them back less. So you may have more than 3k.


Also I would highly advice against just paying the interest and instead add the loan to your mortgage and extend the term by 5 years. Essentially help to buy is an additional 5 years of a mortgage unless you have the cash to pay it off.

[nevernotstruggling]

Hi @nancyjuice7 thank you - I'm only at 2.5 years in to the 5 years but if I end up staying here I will bear your advice in mind that's very helpful.

I'm aware of the 20% fixed repayment.

The house was £185. My cash deposit is some random amount I think it's £11500.

My mortgage was £136k I think.


Similar houses on the estate are listing at £170k right now.

I don't want/need to move tomorrow. It's actually about dd1 secondary school place which will be known next Easter. I'm just trying to understand my options.

[nancyjuice7]

@nevernotstruggling


Hey

So I’ve tried to work out some rates for you, obviously this depends on the length of mortgage you took out and the interest rate but I went with a conservative figure so you may have lightly more equity than this but we’re taking £500-£1000 difference.


185,000
11500 deposit
37000 help to buy
total
48500

Mortgage 136,000 based on 3% over 25 years you should have around 127,000 left on your mortgage


170k
34,000 back to government 20% of 170
127,000 back to bank
Leaving you with £9000 equity


You will have lost some money but marginally in terms of your deposit.
I’m surprised the houses have dropped that much in value. If your not in a rush to move I would put it on for a higher price and wait it out. If it sells it sells, if it dosnt just wait it out or reduce it. But personally your best bet is to stay put.

Hope this helps :)

[nevernotstruggling]

Hi @nancyjuice7 I got out the mortgage statement in the end and tried to work it out a bit. I think I need to stay another year in the house to scratch £10k in equity together and pull £5k together on top in that time at least which is totally manageable as I have half that already. It's not what I hoped for BUT there is a primary school being built across the road just now which isn't open yet and will be when I want to move plus hopefully Covid will have calmed down and brexit been and gone.

Dd1 (nearly) 11 is desperate for her own room but I will have a talk with her about making the most of things. For a dinky new build we have a big garden (much bigger than the other plots) and v low living costs - even with saving we have a great standard of living in a very nice area.

I feel very fortunate all the same x