Selling up and buying - please help me understand my finances?

[AnduinsGirl]

Hi all,
Next year my partner and I are hoping to move approx 150 miles from where we currently live. This will mean selling my house and buying a new one. Please would some kind soul help me understand what money I would need and when, and what I can afford? For obvious reasons I can't speak to a mortgage specialist at the bank at the moment... Here is the situation:
*Bought my house for £117k, with a deposit of 12k.
*Come next year, when we want to move, I anticipate the remaining balance being at 95k.
*We are looking at properties priced £220k-230k
*By the time we want to move I anticipate having £10k in my savings.
Based on this info, can we afford this? I don't know how it works and the internet is not my friend at the moment!!
Any advice is much appreciated...

How much do you think you'll sell your house for? Generally speaking, you'll need a 10% deposit for the new house, so £22/£23K plus about £5K ish for fees (maybe a bit less as you won't have stamp duty if the purchase price is under £250K)

Bloody hell, knew I;d forget that crucial bit of information...! I think it'll sell for 120k.

And really, 5k in fees? Wow, that's loads more than I predicted!

What about your partner, how will their contribution look? That will also be a factor.

You should also factor in

Moving costs via do it yourself or with a removable company

Post redirection costs

Increased property insurance, council tax, utility bills

Emergency fund Incase something goes wrong

God, so much I forgot in my OP. The house will be in my name only for the time being but my partner will be giving me approx £450 a month, which is how we work things now and it works for us. (I'm a lot older than him and had a house before we met.) We intend getting married within the next few years so it will become our house, but as we're a relatively new couple, this is how we're doing it for now.

Also forgot to mention, I will be moving into a job paying approx 55-60k. Partner will begin on approx £18-20k.

Will likely hire a large van and a couple of blokes to do the moving. I've done this before and they've been fab. We don't have a lot of stuff as it's just the 2 of us.
Many thanks for the list of things to consider as well, especially emergency fund!

Hola!
Ooh love houses!

Noticed at the moment they are asking for 15% deposits, won’t be forever but worth keeping it in mind.
Stamp duty will be £1900 for a £220,000 property as long as it’s your only residence. Think stamp duty is exempt up to 250k for First Time Buyers.

You’ll have selling fees, they’re usually a percentage of the selling price, we paid £1,800 to the estate agents to sell our first home (Cheap house) in 2014. Heard Purple Bricks are quite good!
Solicitors fees and searches.
Survey, get the best survey you can. When we were looking sure they were anything from about £300 up to a couple of grand for a full structural. Prices can depend on the size, type and price of property you’re looking at. If you wanted to could get the basic for the purposes of the bank/mortgage and then instruct an independent surveyor for a more in-depth report. Could work out a bit cheaper but do your research.

Moving costs
Any little extras you might want, fixtures, fittings, carpets.

Think that’s it 😂 it’s expensive.

Sounds like your contribution is safe for now but if circumstances change and he goes on the mortgage make sure you have something written up by your solicitor to protect your deposit.

Best of luck and happy house hunting!

Thanks Dark Unicorn! Off, it looks like the 10k we'll have saved will not go very far at all... May have to up the saving every month.
Do you happen to know what money I will be able to use as the deposit....is it the deposit from current house (12k) plus what I've paid off the mortgage? (10k)?

Of course you can, it’s your money (minus the dreaded fees and moving costs ☹️) make sure you are out of any fixed rates when you’re ready to move as they can incur a penalty. It’s usually a percentage of the mortgage for each year outstanding eg: if your mortgage has 3 years to run until the fixed rate finishes, its pretty standard to pay 3% of the mortgage at 2 years 2% and so on.

Have you put the 10k in a help to buy isa or anything? Don’t know fully but there was some controversy about people not being able to use the balance for deposits but it can go towards fees etc. They might have changed it now.

You’ve done amazing to save that much. If you’re using it to move, maybe speak to a financial advisor about the pros and cons of chucking it on the mortgage now to save on interest. Most Mortgage policies allow you to overpay by about 10% a year.

There is an overpayments calculator on Money Expert which is good, it will also give you a projected balance in the coming years so you’ll have an idea of what equity you’ll have to play with.

Economists and estate agents are forecasting a drop in prices this year, estimates have been between 3% and 13%. As long as you have enough to cover the deposit and fees on your next place this could mean your £220k might go further.

Have a look on banks mortgage calculators, they’re pretty good to give you facts and figures. You can play with prices, deposits and the term.

Take what you think your house is worth, knock off the discretionary 5% for negotiation, minus what the outstanding mortgage balance is, add the savings, deduct moving costs and fees, divide the figure by 1.5 and I think this should give you how much you have for a 15% deposit 🤔 😆

If I could pour you a glass of champagne right now, I would do! Thanks so much, that's so so helpful :)

Aww 🤗 cheers darling 🥂 happy to help

So yes as others have said, if the house sells for what you think it will, you have about £25k equity in your current house (the value of the house minus your current mortgage). Your £10k savings should easily cover costs (I think budgeting £5k for this is about right, the biggest thing you'll need to pay is the estate agent commission on the sale (unless you go with purple bricks or another online agent), usually 1.5-2% so around £2000-£2500, plus solicitors fees on both sale and purchase, survey on the new property, mortgage admin fees, removal costs, any urgent repairs needed on your property to make it saleable or on the new property when you move in etc).

Your only issue will be that you will need a close to 90% LTV mortgage on the new house (you have £25k equity/deposit so on a £250k house you need £225k mortgage or 90%,) which is pretty much the highest most lenders will go to outside of specialist help to buy type mortgages for first time buyers. On your salary of £55k you should be OK to borrow this much but it will also be towards the upper end of many lenders range so you may need to shop around a bit.

If you use the remaining £5k of your 10K savings so as to make it up to a £30k deposit and you buy a slightly cheaper property at £200k then that would make it a 15% deposit/85% LTV which will make it easier to find a good deal.

Do be careful about your DP and his claim over the property as you are unmarried, him giving you money every month could be construed as giving him a claim to the house even if he isn't on the deeds/mortgage so you might want to bear this in mind. I know you plan to marry anyway but for awareness.

More helpful advice, thank you so much. I appreciate the breakdown of numbers so much! Regarding partner, I've always been cautious of protecting my assets, not through any belief he'd try and screw me or anything, but more because it's the sensible thing to do. He understands this completely and is a genuinely nice person. But I had no idea him giving me regular money could lead to him having a claim!

No worries - if you are interested in learning more, the technical term for him having a claim on the property is 'beneficial interest', this Shelter article explains more

england.shelter.org.uk/__data/assets/pdf_file/0019/23473/Relationship20breakdown20EW3202D20Cohabiting20couples202D20sole20legal20owner.pdf

You may not need to worry too much, beneficial interest is really quite hard for an unmarried partner to claim particularly if s/he has never made a lump sum contribution to the house in the form of paying towards the deposit or paying for improvements to the house - which is why women are rightly advised on here that if they are financially dependent on a man they should strongly consider getting married. If you are unmarried and living in a house solely owned by someone else, you won't necessarily have any claim on it, even if you have been contributing financially and even if there are children involved. So it's not a walk in the park to simply claim someone's house off them and probably quite a remote eventuality that you end up breaking up and he tries to claim the house, but you never can be 100% sure, no-one thinks it will end up happening to them of course so it's best to be safe.

If you wanted to be as careful as possible you could go to a solicitor and get them to help you draw up a cohabitation agreement setting out who owns what and what will happen to property in the event of a split (these are not necessarily legally binding but would be taken into account by the court in the event of him trying to claim off you), or you could set up an arrangement where he doesn't simply give you the money, perhaps he could simply pay for the bills instead if this covers his share, or if you have a joint account the money could go into there instead, so it isn't linked to paying the mortgage in the same way. This is what DH and I did when we briefly lived together in a flat I owned before we were married and fully shared finances, we worked out all our shared expenses including mortgage, bills, groceries, socialising etc., then divided it in 2, it worked out that my 'share' was paying the mortgage and his was paying for pretty much everything else from a joint account which he mainly funded but we both had cards for, it worked quite well, of course it required some trust on both sides and I suppose had we split up he could still have made life difficult but that's life...