Please explain in simple terms 😀

[Mycatlady]

Hi, I was wondering if someone could explain to me in simple terms what happens when you want to sell your house when you still have some of the mortgage to pay off.

If we go from the below example.
A house cost £160,000 a good few years ago and 10 per cent was put down as a deposit. The mortgage on the house was £144,000. The house is now worth £300,000 and the amount on the mortgage that has been paid is £77,000 and the remaining balance on the mortgage is £67,000. Minus any fees re: moving, how much would I walk away to put toward a new house?

Thank you, I know it sounds daft and I've tried to Google but I do not understand it.

x

If you sold for 300k minus the 67k remaining on the mortgage you'd walk away (before fees) with 233k

You’re overthinking it.
In simplified terms, if you sell the house you get £300k. You owe the bank £67k so you need to pay that to them. That leaves you with £233k to buy a new house, then minus any fees.
In reality if you are in the middle of a fixed mortgage product you can often port it when you move but the above calculation is assuming that you don’t need a mortgage for the new house.

Literally what house sells at minus what's left on the mortgage.

Im not sure why you are getting confused lol you only need 2 figures.

although if you are on fixed rate and dont port mortgage to a new property theres usually a fee for paying early. 3% on my mortgage.

Hi mycatlady! I'll have a go, but others may well do a better job.

If you sell the property, then the money that the purchasers pay to you will probably be paid into the account of your solicitors, assuming you use one.

So if they agree to pay £300,000, they (or their solicitors) will pay £300,000 into your solicitors' account.

From this:

First of all, the solicitors may take off the fees you owe them for their work. Say, for example, this might be £2,000.

Secondly, the solicitors would pay off the balance of the mortgage by paying that amount to the mortgage company. In your case, you say the balance is £68,000, so this is what your solicitors would have to pay to the mortgage company.

Unless there are any other mortgages or charges in place (for example a second mortgage, or if someone else has a form of 'charge' over the house) then the balance would be paid to you.

So on these figures,

• your buyers would pay £300,000 to your solicitor
• your solicitor would pay (say) £2,000 of this to themselves and £68,000 to your mortgage company
• This would leave £230,000, which your solicitors would pay to you.

Although you originally borrowed £144,000, the amount left that you owe (the balance) will likely be less because of the payments you have been making to the mortgage company in the meantime. But although you have paid £77,000, the balance won't be £77,000 less because only some of that will have been paying off the actual amount (the 'debt' or the 'principal amount'); the rest will be paying interest to the mortgage company.
Does that help?

Thank you so much x

Thank you so much x

Thank you so much x

If you knew me you would see why I get confused so easily 😀

I can quite imagine, I have a few friends awesome at explaining politics, can craft etc etc but cannot fathom math and overthink like you.

Hopefully your next property will require no mortgage as it looks like an awesome return on what you bought for!!

Don't forget estate agent fees and solicitor fees and survey and searches and stamp duty on any new purchase. Plus land registry fee.