Trade Up

Sammie

Hi there,
hubby are I are thinking of selling and buying bigger but we're not 100% sure of the process. Theres about 200K on our existing mortgage and The house should go for about 320k.
We hope to be able to borrow enough to clear all our loans etc and buy a new house.
Has anyone ever done this, I'd love to know how to even start.
Cheers

Sammie

Sammie wrote:

We hope to be able to borrow enough to clear all our loans etc and buy a new house.

Star by going to your bank, building society or mortgage broker and finding out what you will be able to buy. Price auctioneers, solicitors etc.

Then look around. Put your property up for sale in the meantime, just tell the Auctioneer that you are searching for someplace else. They will no doubt have recommendations.

Then I guess it's just a case of trying to get as much money from your own place and paying as little as you can for the place you like!!

Sammie

Sounds easy enough, The only thing Im worried about is we have about 30k in loans, car loans etc, would this case a problem?

MorningStar

It is very easy to do and they will most likely not really be bothered by additional loans.
Things you should consider
1) Are you in debt because of overspending?
2) When and how do you plan to pay off the loan debit?
3) Are you selling your property at the right time

1) if overspending increasing you mortgage payments might be a big problem for you personally. 30K is not a normal amount to have in debit for somebody owning a 320K house

2) Consolidating loans into mortgage is only really advantagous if you pay it off in the same time scale you would have originally. 30k @ 10% in 3 years = 39k 30k @ 3% in 30 years = 57k

3) I bought a house 5 years ago and sold for a 30% profit, if I kept it another year it would have been 60% and again another year it would have been 100%. THe other house we bought did increase but not earning the same money

MorningStar

MorningStar wrote:

3) I bought a house 5 years ago and sold for a 30% profit, if I kept it another year it would have been 60% and again another year it would have been 100%. THe other house we bought did increase but not earning the same money

But MorningStar, the most important question is whether your happier! I mean, I believe my house has gone up about 60% in only 2 years, but (i) I like my house and won't sell, so it's no good to me (ii) every other similar property in the area has gone up a huge amount too, so it's not much good to me.

iguana

Do bear in mind that as a second time buyer you will have to pay an increased level of stamp-duty.

dingding

When negociating your mortgage rate you can get a lwer interest rate if your mortgage is a smaller % of house price. what I mean is you should get a better interest rate on 200,000 on a 500,000 house that on a 250,000 house. It is as well to shop around By buying a new house you will be putting a lot of your own capital . profit from your existing house into it. tihs could negociate a lower rate. The banks will not give it to you by default, I knocked 2 years of the term of my mortgage by pricing around an thretning to move. Helps if you have a lot of business with the one bank and they may be loosing car loans and credit cards as well.:)

bbbbb

not sure if the sums add up, to me it looks like:
current house value €320K
mortgage outstanding €200K
other loans €30K

Money available:
€90K (if you clear your loans)
€120K (if you don't)

Assuming the house you trade up to is €400K plus, you'll have stamp duty at 7.5% = €30K plus. In addition the're will be estate agent fees (x2) so probably about €5K all together.

Money available:
€55K (if you clear your loans)
€85K (if you don't)

For a second time buyer, I don't think you can get more than a 92% mortgage, but that should be ok:
- €55K = 8% of €687.5K

The real problem will be "affordability", i.e. current earnings.

Or put another way, I think you can only afford to buy a house that a first time buyer in your circumstances could, + €55K (or maybe €85K).

MorningStar

Deleted User wrote:

But MorningStar, the most important question is whether your happier! I mean, I believe my house has gone up about 60% in only 2 years, but (i) I like my house and won't sell, so it's no good to me (ii) every other similar property in the area has gone up a huge amount too, so it's not much good to me.

I am happier the point is about the best times to trade up. Waiting would have meant we had a lesser mortgage when trading up. We wanted bigger which we got but if we had waited we would have got bigger with less mortgage. It depends on what value your house is at and the part of the market you are at. 2nd houses for FTBs have gone up the most money and probably will continue to.