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What happens if you sell your mortgaged home then move into rented accommodation?

(20 Posts)
SootySweepandSue Tue 28-Jun-11 11:33:35

Does anyone know?

Do you bank the money from the sale and then pay rent for the new place and mortgage? Or do you pay the mortgage early with the sale money?

We are thinking of moving as we have problem neighbours but have gone from 2 incomes to 1 as I'm a SAHM. Just trying to figure out finance options if we were to move. Would we have to get a cheaper place as mortgage isn't paid off that much/property not gone up massively? We put down 10% deposit initially.

thingsabeachanging Tue 28-Jun-11 11:44:32

Afaik your mortgage is secured on your house. No house, no security, no money so you have to pay off what you owe the bank (and early repayment fees if they apply) the rest is yours to do as you will.

Hullygully Tue 28-Jun-11 11:46:14

What on earth do you mean??

If you sell your house you have to pay off the mortgage and you keep whatever's left.

titchy Tue 28-Jun-11 11:48:38

Of course you have to pay your mortgage off when you sell - a mortgage is a loan secured on your hosue. hmm

No house no mortgage. Add in estate agent fees and stamp duty on your next purchase if you decide to buy and you may not have anything left if your deposit was small.

SootySweepandSue Tue 28-Jun-11 11:48:54

I see. I guess not many people would sell and move to rented then unless they made a whack on the property.

I can see that we might get stuck until I go back to work to get our 2nd income back.

We were thinking of renting first to check out new areas.

Georgimama Tue 28-Jun-11 11:49:14

I am amazed someone could actually have a mortgage and not know how they work.

Mortgages are loans secured on the property. Most people use this loan to actually buy the house itself, but that is not the only purpose for the money (hence why people re-mortgage in order to do an extension or release equity). when you don't have the property anymore the bank doesn't have their security so the loan has to be redeemed simultaneously with the sale. If it isn't going to be the lender won't agree to the sale being registered.

If there is any money left over after the loan is repaid you keep it. If the proceeds of sale aren't enough to repay the loan you have to find the difference.

SingingTunelessly Tue 28-Jun-11 11:49:20

If you sell your property you have to pay off the outstanding mortgage. If you want to rent out your mortgaged property and move into rented yourself then you will have to get permission from the bank/building society to rent it out. You will of course still be liable for paying the mortgage.

meditrina Tue 28-Jun-11 11:52:48

And if the money raised by sale of the house does not cover the outstanding mortgage, then you will have to agree a repayment plan with the mortgage lender to clear the outstanding debt. Typically this would mean turning the money owed into an unsecured loan (higher interest charges would apply) which you would have to pay off in an agreed timescale.

Hullygully Tue 28-Jun-11 11:54:14

Did you think you would sell the house and then keep on paying the mortgage monthly? <tries not to laugh>

thingsabeachanging Tue 28-Jun-11 11:56:58

Sorry I dont get your second comment. People sell up and go on to rent to check out new areas all the time. They have to put their deposit money in savings if they intend to buy again at a later date.

Be careful though as any new mortgage may not be at as good a rate as you maybe paying now (esp if arranged before the recession) if that is an issue a bought house to another bought house maybe a cheaper option as your bank may be able to "port" your current deal.

If you dont get this stuff, there are many who dont, you really need to talk to a financial adviser. They may cost a lot at the outset but could end up saving you a lot more if you proceed without knowing what you are doing.

SootySweepandSue Tue 28-Jun-11 12:04:42

Ok I realise I have not done any homework on mortgages am normally reasonably intelligentgrin

I have no idea what happens when you move house that's all. I thought mortgages were transferable to new houses but for us this is unlikely as we've only got 1 income in the short term so would have liked to rent but not loose our initial mortgage offer. Looks like were are stuck though.

Hullygully Tue 28-Jun-11 12:07:30

There are portable mortgages, but you should know if you have one or not, and yes, they are likely to look at your earnings - also you can't port it if you're renting and not buying!

Why not rent the house out, especially if it's got a good mortgage deal, while you rent elsewhere?

Georgimama Tue 28-Jun-11 12:07:33

Well they are transferable in certain circumstances if the lender agrees to rolling the loan over to the new property (and you can avoid early repayment penalties by doing this). But sometimes it is better to redeem and take out a new mortgage on new terms. YY to chat with an independent financial advisor (one who really is independent, not selling a range of mortgages which are all actually with the same lender - or a handful).

SootySweepandSue Tue 28-Jun-11 12:14:25

Yes agreed we need to see an advisor!

We weren't planning on moving at all till I was back at work and DD in preschool. Yesterday my neighbours dog - a 4ft staffie jumped through a hedge and nearly attacked my 10 mo. There are rumours the family are drug dealers. I am worried and my brain is a bit scrambled.

SootySweepandSue Tue 28-Jun-11 12:23:44

I don't think we'd have much luck renting this place with the neighbours either. But otherwise I can see that would have been a good option.

thingsabeachanging Tue 28-Jun-11 12:46:27

I can see why you are worried but rumours are just rumours. If you have any evidence this is the case you should report to the police, manging agent, owners, local authority whoever fits best.

The dog thing must have been very scary and I can see why you are in shock. Assuming there are no other restrictions (listed buiding, land covenants etc) you can put up a fence of less than 2m in height on your land.

This is what i tell my husband. "We do have options! We just dont want to take most of them for various reasons"

SootySweepandSue Tue 28-Jun-11 13:08:25

We put up a 2m fence where the boundary between us and them is already. Unfortunately the dog accessed via another garden where our boundary only had a hedge. It literally threw itself through the hedge! We have already arranged to have fencing put all the way around which will happen next week. Total cost of this is over £1500 sad. The dog is very tall I am even worried it could jump a 6ft fence if it were to leap from a bin or such.

The neighbours are entirely unreasonable and said they could not control the dog. We spoke to the HA yesterday (we own but it is ex-council) and discussed what would happen if we make a complaint. Unfortunately they are really powerless and if the family do not take action ( ie, respond to a letter) we would have to take the family to court ourselves. All of this would be declared on the selling information if we were to sell so we can not win. The HA lady admitted that it rarely works out well for the family that make a complaint. I believe the family are already known to the police judging on the visits and the lady has told us her son is an addict, but if I see anything more I will contact the police anonymously.

We are so gutted to be in this situation. We are in a lovely area otherwise.

RachelHRD Tue 28-Jun-11 14:46:52

If you have a mortgage which can be ported to another property it is possible with some mortgage companies to have a break in between sale and purchase especially if you are buying a new build. I think the maximum time would be six months but some mortgage companies would only allow 3 months.

Worth talking to your mortgage company to see what they could offer you.

gettingeasier Tue 28-Jun-11 14:51:54

Oh Sooty thats awful but in truth if £1500 costs means you can stay in a house and area where you are otherwise happy then that has to be much easier and cheaper than moving although more expensive than a lump of poisoned meat

SootySweepandSue Tue 28-Jun-11 15:11:30

Yes I agree a small price to pay.

I think we will have a few years at least before DD learns how to repeat 'you f****g ugly bitch' which is how the neighbours DS addresses his mother when they play together in their garden. She finds it hilarious incidentally sad. Clearly we need to do much more research before we buy next time.

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