Explain buying next house and getting a mortgage on new house works

[Sailawaygirl]

Hi
Very obvious question but just need it explaining in an easy to understand way.
We bought first house 5 + years ago. Currently on a fixed mortgage for another 2years. If/when I want to move how does this work?
-Do I have to wait to till end of mortgage period and then go on a month by month payment while I look for a new place? Or can I move even with current mortgage contract?
-Do I have to pay stamp duty up front or can I use money from sale to pay stamp duty ( thinking of moving to a cheaper area)?
-Do I have to put another deposit down ( someone in real life said something about this and really confused me ). I thought i would be able to just remortgage with new house details ?
-Other than stamp duty and solicitors fees and mortgage fees , are there any other big costs I need to think about?

Basically I don't have many savings to put any extra deposit down or cover any big fees upfront ! But I don't think many people do! So how does it work.

Ok, so;
check your mortgage deal. You should be able to port your mortgage to a new property.
no, you don’t pay stamp duty upfront.
no you don’t have to put a new deposit down because your money from your current house acts as deposit.
the solicitor usually takes some money up front to pay for searches etc (usually around £500) and you need to consider if you want to use a moving company.

@Blueuggboots thank you!
That's helpful.
It's hard to talk to friends and family because the conversation turns very quickly to 'best deals' and best houses to buy for investments. ( and I'm not thinking investment just house to live and investment in quality of life I guess!)

You 'port' the mortgage you've currently got, and complete the rest of the 5 year term against the new house. If you need more money to buy the house, you take a second small mortgage, with its own separate terms. So you'll have 2 mortgages. That's what we've got.
No, you dont put down a 'deposit' as such, ever again. You only do that for your first property.

You do put down a deposit, but you can use the deposit that comes from your buyer to fund that. You will still be expected to pay a 10% deposit but often that is negotiated down, just be aware that if you were selling for say £200,000 and buying for £600,000 your buyer's £20,000 deposit is only one third of what the person selling to you wants i.e. they want £60,000 so they may or may not be OK with that.

You need to pay for searches up front but stamp duty land tax and estate agents fees are paid quickly after completion.

Estate agents fees too, don’t forget.

In terms of porting the mortgage that is fine but you will end up with two separate mortgages with two separate terms so you can get stuck with the same lender or moving to the standard variable rate on the older one. The closer you can align the terms, the better.

Whether you need to put a deposit down and how much depends on the contract. It would be normal for your buyer's deposit to be the deposit on your next property. If the person you are buying from wants a bigger deposit then you might need to find some extra cash. However exchange and completion can take place on the same day so doesnt necessarily have to be a problem.

If you are moving to a cheaper property then no additional deposit required.

You can port, or it may be cheaper to pay the early exit fee, these usually decrease over the mortgage term so you can check that. All fees etc are on completion of sale, it’s only surveyors etc that need paying at the time and moving companies etc.

So long as you haven't lost money on your house and the sale price is under the mortgage balance.

We did, and in 1994, had to pay off the negative equity and find a new deposit.

Hopefully this is not the case for you but it can happen.

You can 'port' the remainder of your existing mortgage deal to a new home, but you will be restricted to staying with the same lender. You still have to go through credit checks and underwriting regardless.

If you want to change lenders, you can exit your deal early but may have to pay an early redemption charge. Speak to a financial advisor to see whether it's worth doing that.

You won't usually have to fund any major expenses up front. Stamp duty, estate agents fees, deposit can usually all come from the sale of your existing home assuming there is sufficient equity. In terms of expenses you may have to fund up front, think about searches, survey costs and removals costs. Even removal costs you might be able to pay on the day if your removals firm are okay with that arrangement.

you port your mortgage which is what were doing. We are currently in process of trying to sell our place and have got an offer accepted on a house. Our existing deal runs out late next year so our plan is to port our mortgage and borrow extra to obviously fund the new property and we have this already agreed in principle. So effectively we will have 2 mortgage loans. The new loan we borrow we will put it on a tracker meaning when our existing deal runs out late next year, we can merge both together and look for new deals without any penalties.

Thank you everyone very helpful and interesting So I think my house should be worth about 280,00 ish . We bought it for about 250,00. So IF I wanted to stay in same area and buy something more expensive such as 350,000 I would be able too port my current mortgage and then have a second mortgage to cover any difference? As long as we completed and exchanged on same day. And because original deposit is staying the same loan ration would be higher. ( although have over payed a bit on mortgage it won't have made a big dent)

Yes exactly what were doing currently. You will port the mortgage and see if your current mortgage lender will lend you the extra money to size up for a new house. You will just have 2 separate loans. Obviously 2 separate terms, interest rates etc.

So practically: first step is to think about options and affordability. do the online mortgage calculators work for this situation? I want to have a good rough idea of what we might be offered before I talk to mortgage broker.
Also need to decide if I stay in area and pay more or move and potentially get a better house. Although the paper work for new job and new mortgage and potentially paying rent while while everything works it's self out would be very stressful!

(DP wants to move, im 50/50 about moving area, I'm main earner and as you can tell main organiser! )

ring your mortage provider and go through a mortgage in principle mortgage application to find out the maximum you can port and borrow on top of your existing mortgage. You and your partner will have to go through all the usual checks again like how much you earn,loans, credit cards, balances, outgoings etc etc, but once all done you will get a agreement in principle and you will know roughly how much maximum you can borrow extra so you can start seeing your budget for a new house. We did this a while back and have an agreement in principle ready so when we do eventually sell, we then proceed and go through a full mortgage application to borrow extra so we can purchase the house we are currently buying