How do I know how much I can spend on a house?

[smellyflowers]

I bought my first house about 5 years ago and just remortgaged it (ouch!). In the next 5 years we want to move again. How will I know how much I can spend on the new house?

[3WildOnes]

Ask your bank?
Or work out how much equity you have + how much you are able to/want to borrow.

[smellyflowers]

Yes, how do I work out the equity and how much I can borrow? Do I do an agreement in principle

[bibbybox]

you can use an online calculator to see how much you will pay off in the next 5 years, add that to any previous equity

[NoSquirrels]

How much equity will you have (selling price of house minus outstanding mortgage amount)?

How much mortgage will you be able to borrow (and how much can you afford to pay each month)?

It’s the same as when you bought your first house, but the equity is your deposit.

[xyzandabc]

The equity is what your house is worth (what someone will pay you for it) minus any borrowing attached to it, eg the remaining mortgage.
To find out what you can borrow, Google mortgage calculator and fill in the details to give you a ball park figure.

Nearer the time when you want to move, get your house valued by estate agents and either do your own research in to mortgages from different providers, or go to a mortgage broker who will find the best deals for you.

[NoSquirrels]

If you just remortgaged, did your bank do a valuation? That’s what your house is worth. Less the outstanding mortgage = the equity you have today.

Obviously this will change in the next 5 years depending on how much you pay off your mortgage and what happens to house prices.

You can use an online calculator to work out how much you’ll pay off the mortgage. Or look at the paperwork - did it come with a schedule of what you’ll owe each year?

Do you have a fixed term/early repayment charges on the mortgage? That will probably limit when you can move?

[smellyflowers]

Thank you so much!

[CattySam]

If you’ve fixed for 5 years then you’ll have an early repayment penalty unless you port. It’s usually cheaper to pay that rather than having 2 mortgages on 2 different rates.