Decision in principle amount

[Fidgety31]

Hi there
Could someone please explain to me in simple terms what this means?
I have my house on the market for £220k but it may sell for less ?
The amount left in my mortgage is £53k
I have a decision in principle which says I can borrow £70k

So what value of house am I able to buy up to ?
if I use the equity from my sale - say £150k by the time ive paid fees and debts ?

I am really confused . Any advise appreciated .

Yes - equity plus amount you can/want to borrow up to max amount. Minus stamp duty, legal fees and other moving costs unless you have those separately covered.

Thank you for the reply - so does that mean I can look at houses worth up to £220k to buy ? (Assuming my equity is £150k)

You won’t need to pay stamp duty up to £250,000 but unless you have other funds you will need to pay the legal fees for both selling and buying, estate agents commission plus removals. I don’t know what quotes you have had but I would guess at least £6000 for all that.

Thank you - i am confused as to what happens with my existing mortgage and what value of house I am able to buy up to ?

You pay off your existing mortgage when you sell your house.

In simple terms, the amount you can spend on your new house is equity plus agreement in principle amount (assuming this doesn’t change during the process)

220 - 53 = 167
167 + 70 = 237
Take off fees (Selling estate agent of, maybe, 1.5% at £3.3k + (20% vat) £660 =£3960.
Level 3 Survey - Maybe £1,200 plus £240 Vat? = £1440
So take that out of your future budget immediatley.
Then Solicitors ? (Although I read the other day that most estate agents are also soliccitors? Maybe £1,300? not sure if VAT at 20% is added - £260 - ask them = £1560)
Then Survey (Plus VAT tax) - Prob, for an L3, about £700 + Vat = £840

Searches.. ?? £400 ?? Don't know about Ecosse.
And Moving Costs. Maybe £800 + VAT = £960
I think that's most of it.
Sooo. (If you manage to sell at £220K Then get an additioanl mortgage)
£237,000 -3960 - £1440 - £1560 - £840 - £400 - £960

Amount you have as a deposit = £227,840 based on the figures above, but it would be wise to buy something for less and have, maybe, 6 months of living costs in the bank to fall back on. ??
Good luck - you can get a mortgage advisor to look at this - figures may vary :)

Most EAs are certainly not solicitors, I very much doubt any are. You've also included 2 surveys in those calculations.

It might be better to port the mortgage across if you are on a decent rate, rather than paying it off and starting again. Also did you DIP factor in the e costing migrate- ie you could borrow an extra £70k on top of the existing £53k?

Apparently in scotland they are.
explain what you mean by two surveys?

Do check that you can pay off your current mortgage without penalty. Otherwise you need to take it with you and only your current provider will lend.

You've included 2 level 3 surveys in your costings.

I doubt there are any actual solicitors that are Estate Agents. Conveyancers perhaps, but even those I wouldn't think are commonplace and certainly wouldn't be advisable when buying a property.

Thanks for all the replies .
my current mortgage can be payed off with no penalties .
I got the decision in principle from my current lender - is it advisable to get one from elsewhere too ?
I got the same amount of £70k when I put in to pay the mortgage off and when I changed it to porting the mortgage- so I assume this is the amount I can get as extra to the original £53k

If staying with current lender can you not port existing mortgage, in that case you be like for like, but if trading up may need additional, and therefore ask to add to it.
You lender isn't offering much more than currently owe, is it worth buying somewhere else given costs of moving?

Sorry cross post just read update the 70 is additional to 53

My assumption would be that the 70k is the max mortgage amount so 53 plus an additional 17. They won't suddenly increase the overall to 123k

https://espc.com/news/post/why-you-should-use-a-solicitor-estate-agent-when-moving-home

@BaronessEllarawrosaurus if it is £70k total - how does that work with my existing mortgage? I don’t understand the ‘porting ‘ process

@MotorwayDiva I’ve already moved area and am in rented so need to sell my house to buy one here

Seems a bit odd that a solicitor would study law for 6 years to become an estate agent. That's why I assume they're actually just conveyancers.

If you input that you already have an existing £53k mortgage into the calculator and it came up with £70k then I assume they will lend you an additional £70k.
The average calculation is for 4.5 times your salary so that could give you an idea.
Porting means that you take the existing mortgage on its current terms with you and get a second mortgage to top it up. This might be worth it if you are on a fixed term with a lower interest rate than you can get now.
It may be worth seeing a mortgage broker who can advise.

It doesn't however make sense that if they pay off the current mortgage they can still only get 70k, that implies that it's the maximum amount that they would be able to borrow on their income overall

In Scotland it’s different. Actual legal companies who tag on the estate agency function.

Porting is possible with some mortgages, it’s moving it to a different property. I’d phone and ask if it’s possible. It means you aren’t paying setup fees.

Ah, ok. We don't have that down here. EA's have conveyancing firms who they try to steer you towards as they obviously take a cut (same with mortgage brokers) but I would generally swerve them!

Yeah. It’s funny. I’ve lived both in England and in Scotland and bought houses in both.