Completely clueless about everything to do with selling and buying houses....please help(4 Posts)
Hi we bought our house 9 years ago and even though I love it, it is starting to get too small for us. We have just had our 2nd dc and in a three bedroom house we don't have a great amount of room any more. There is a house in the village next to us (where I want to live eventually) that has come on the market for £135,000. It is 4 bedrooms and garage and dining room which could be a playroom. We currently owe around £80,000. How does buying a property work, I know that sounds really thick but I haven't got a clue! Do we sell our house for x amount (not even had valued yet) and then pay back the £80,000 owing then use the rest to knock off the £135,000 or whatever we can get it knocked down to? Please help me with the answers so I can go to dh more informed, I told him I had seen it in the paper and he said, we can't afford it and closed the subject at that, but I am wondering if we can and he is as clueless as me Also how do we find out how much we can have now for a mortgage 9 years ago we were alowed £60,000 has anything changed, will the fact we have had a mortgage this long count for us or will we not get offered one again in current climate? Sorry for all the questions but TIA
Yes you are exactly right, whatever you get for your house will pay off the mortgage, that mortgage would normally be dissolved and you will use your equity as a deposit on your new property (ie: what's left once you have paid back your mortgage)and get mortgage for the remainder.
Re: mortgage, banks are very cautious in lending at mo so I'm not up to speed on the multiples but I think its all linked to the percentage mortgage you want on the value of the property ie: 70% of the value you would get a better deal than 80% for example.
when your house is valued, you can work out what you might have as equity (the price you'd hopefully sell yours for minus the £80k or whatever is left on our mortgage.) this will be your deposit on a new house. so work out what it is as a percentage of £135k (it needs to be over 10 per cent of the price, ie more than £13,500, to have a hope of getting a mortgage in current climate. the more it is obviously the better as the less you'd have to borrow). if you can't wait to get it valued by an agent, as a rough guide have a look in the paper or online and see if you can see similar houses near you and what they're selling for.
to work out what you can then borrow, assume 2.5 times your joint income (or three times a single income if only one of you works). that 's a rough idea of how much people will lend you (some banks will lend more depending on circs, some less, but that's reasonable).
lots of banks have calculators on their websites that will tell you how much you can borrow if you type in your income.
then work out what the monthly repayments on that might be, again banks and building societes have calculators on their websites. check you can afford that much out of what you take home every month.
the payments will depend on what interest rate you can get, and the lowest rates will only be for people with a reasonable deposit (ie 30-40pc) but there are some rates now for people with 10pc deposits and up.
the fact that you've been in the same house for nine years is a good thing, it means you'll have built up equity in the house (the price will've gone down lately, but it will've been going up for about seven years before that, so you should still be better off than you started). as long as you've not missed any mortgage payments you will also have a good credit record which will help you get a mortgage. with reasonable deposit and a solid credit record - ie no court judgements, credit card arrears or other bad debts - you are exactly the sort of people who can get a mortgage in current climate so long as one of you is in stable employment.
hope that helps....
Thanks so much for all your replies.....now I have to work on DH!
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