Selling up and paying off mortgage

br2015

I was wondering if I could get some advice about the following situation myself and my husband are in. We got a €180,000 mortgage on a new house, we paid €200,000 a year ago and the house is now valued at €280,000.
Our circumstances have changed (family and my job has been relocated) and we want to sell up and pay back the €180,000 to the bank which would leave us with enough money - €100,000ish plus our savings - to buy a house where we wish to move. We might need a personal loan, depending on the house we buy, but definitely not another mortgage.

There is a fixed term penalty of €4000 in our loan offer but I am wondering can the above be done and are there any other costs I am not considering?

Thanks a lot in advance!

whomitconcerns

You should probably call your bank and ask. Everyone else would be only guessing

br2015

I was hoping that somebody else on this may have done it before and may have a rough estimate - or some advice.
We are at the very early stages of this whole process.

GavMan

You'll need to contact the bank and get an exact figure to settle the loan. Then you'll know where you're at

jon1981

no idea but at a guess , other cost of sale things..

Estate agent fees ? what's the going rate these days?
Solicitor fees? 2k when you're a buyer , not sure when you're the seller

goldenhoarde

as whomitconcerns (and gavman) says the bank are the only ones who can tell exactly what the costs of breaking the fixed term mortgage offer.

Other costs then are (jon1981)

1) estate agent
2) solicitor to handle conveyance
3) solicitor to handle conveyance on new purchase

This could easily be 9/10 grand (based on 1% of sale price plus the solicitor extras) plus the banks 4 Grand is almost 15 already leaving you 85+savings for next property!

Depending on location of house is becoming a landlord an option? would you be able to get another mortgage in this instance if needed? again talk to the bank as probably selling is the only option if the bank would not entertain another mortgage.

surpy

Was/is it your ppr? You would be hit with capital gains tax if not

hfallada

goldenhoarde wrote: »

as whomitconcerns (and gavman) says the bank are the only ones who can tell exactly what the costs of breaking the fixed term mortgage offer.

Other costs then are (jon1981)

1) estate agent
2) solicitor to handle conveyance
3) solicitor to handle conveyance on new purchase

This could easily be 9/10 grand (based on 1% of sale price plus the solicitor extras) plus the banks 4 Grand is almost 15 already leaving you 85+savings for next property!

Depending on location of house is becoming a landlord an option? would you be able to get another mortgage in this instance if needed? again talk to the bank as probably selling is the only option if the bank would not entertain another mortgage.

Sell up. Dont consider being a landlord. It's too much work for little benefit. OP aren't liable for capital gains tax. I think you need to live in the property for 2 years to be exempt for it due to it being your principal private residence.

jon1981

I thought CGT doesn't apply if it is your primary residence you are selling?

br2015

Thanks for responses. We don't want to become landlords, we are young at 24 and the prospect of a 35 year mortgage as we have was never that appealing but we got a great deal on a great house that is in an in demand area so we went for it at the time. We didn't buy the house to sell it a year later and make money but it is a bonus.

I am conscious of the solicitor / estate agent costs - thanks for the breakdown. I think to be mortgage free in a larger house would be worth the initial costs. I am from where my job is relocating to so all our family are there.

pwurple

How long is your fixed term for? 1 year, 2 years, 5 years? If it was only 1 year, you might be near the end of your fixed term already. In that case, no penalties.

When you take out a mortgage you are agreeing to pay back the principal plus interest, so it's not just 180k you owe for a start, unless you have been overpaying... But either way, it's impossible for anyone on the internet to say. Like the other are saying approach bank and see.

Also, if I had the choice between a personal loan (at ~9-15% interest) and a mortgage for the same amount (at ~4-5% interest) I know which I'd take. Mortgages are the cheapest finance you'll ever get from a lender. You can get a ten year mortgage as well as a 35 year mortgage. I've never taken out a 35 yr mortgage.

jon1981

If you can recognise the extra 100k and move somewhere you want to live and be mortgage free... it's a no brainer really

jon1981

pwurple wrote: »

When you take out a mortgage you are agreeing to pay back the principal plus interest, so it's not just 180k you owe for a start, unless you have been overpaying...

What you mean by this? If I'm not in a fixed term and I chose to pay my mortgage off early, i don't have to pay the interest only the principle still left at that point in time.

br2015

jon1981 wrote: »

What you mean by this? If I'm not in a fixed term and I chose to buy my mortgage off early, i don't have to pay the interest only the principle still at that point in time.

This was what I thought too. Our loan offer just says repay the loan early and break the fixed term contract (its for 3 years so a while away) we are liable for €4000.

In relation to mortgage v personal loan, we are only probably looking at €20000 loan so I don't think you can get a mortgage that low but I stand to be corrected. A low rate credit union loan is what we are thinking.

pwurple

jon1981 wrote: »

What you mean by this? If I'm not in a fixed term and I chose to pay my mortgage off early, i don't have to pay the interest only the principle still left at that point in time.

The OP IS in a fixed term

But even with a variable, the amount you pay back is still bigger than the amount you initially borrowed if you had the mortgage for more than 1 month.

They are required by law to give you the printout of how much you pay back, and how much is interest vs initial amount borrowed. In the first few years, the majority of what you are paying is interest.

pwurple

br2015 wrote: »

This was what I thought too. Our loan offer just says repay the loan early and break the fixed term contract (its for 3 years so a while away) we are liable for €4000.

Phone them for the exact amount. It really is the easiest way to get your answer.

In relation to mortgage v personal loan, we are only probably looking at €20000 loan so I don't think you can get a mortgage that low but I stand to be corrected. A low rate credit union loan is what we are thinking.

Ask the bank. if you can get a small mortgage for that amount, you'll be on an excellent LTV ratio as well, which should bring the interest rate even lower, down to about 3.8% maybe? You can overpay and pay it off quickly if you don't fix. (Credit union even on discount rate would probably be 9%)

jon1981

pwurple wrote: »

The OP IS in a fixed term

But even with a variable, the amount you pay back is still bigger than the amount you initially borrowed if you had the mortgage for more than 1 month.

They are required by law to give you the printout of how much you pay back, and how much is interest vs initial amount borrowed. In the first few years, the majority of what you are paying is interest.

The fixed term part was dealt with and the OP is aware she has to pay that back.

But with respect to variable mortgages, in year one my monthly interest was ~1100 my Principle repayment was ~400... how would I end up paying back more given that I am eating into the principle?

br2015

Would it not be the case that the amount we owe is still the amount borrowed though (€180,000) plus the fixed term penalty so €184,000? We are prepared to lose the repayments made since Sept 2013 as these would have been swallowed up in interest but do you think interest not yet paid - or due - is also applicable?

surpy

br2015 wrote: »

Would it not be the case that the amount we owe is still the amount borrowed though (€180,000) plus the fixed term penalty so €184,000? We are prepared to lose the repayments made since Sept 2013 as these would have been swallowed up in interest but do you think interest not yet paid - or due - is also applicable?

Quick calculation suggests your repayment is around 820. (excl trs)
Your mortgage balance is currently around 177 and 4k is about 6ish interest repayments bringing you up to September (the end of 2yr fix) when the balance is around 176.

So I'd suggest you have 176 principle plus around 4k interest which is 180 total (and it's just coincidence that it's the same as the amount you initially borrowed)

br2015

surpy wrote: »

Quick calculation suggests your repayment is around 820. (excl trs)
Your mortgage balance is currently around 177 and 4k is about 6ish interest repayments bringing you up to September (the end of 2yr fix) when the balance is around 176.

So I'd suggest you have 176 principle plus around 4k interest which is 180 total (and it's just coincidence that it's the same as the amount you initially borrowed)

Thank you so much surpy - that is a great breakdown to have. Thanks a million!

TheDriver

You also must pay bank legal fees to discharge the mortgage

The_Morrigan

TheDriver wrote: »

You also must pay bank legal fees to discharge the mortgage

That should be a nominal fee, the filing fee is circa €40. Make sure you file the deed of discharge or get confirmation from the bank that they have filed it on your behalf.

br2015

The_Morrigan wrote: »

That should be a nominal fee, the filing fee is circa €40. Make sure you file the deed of discharge or get confirmation from the bank that they have filed it on your behalf.

Thanks a million for that - I wasn't aware of that form before so many thanks.
I rang the bank this morning and they confirmed the total owed on our mortgage a/c is just under €180,000 including the fixed term penalty so we are going to make the move.

Thanks for all your help.

You might have to consider the cost of renting if you aren't able to move into the new house immediately after selling your current house.

Good luck with the move.

br2015

Deleted User wrote: »

You might have to consider the cost of renting if you aren't able to move into the new house immediately after selling your current house.

Good luck with the move.

Thanks a million for the tip, we reckon we won't get it all to sail that smoothly but I am from where we are hoping to move to so my parents have offered for us to stay with them.

Thanks

seamus

Aside from the bank penalty, other costs of moving that you may have to consider:

- Estate Agent's fee (1.5% of sale price + VAT)
- Solicitor's Fees (1% of both sale & purchase price + VAT)
- Conveyancing and similar fees (Up to €1,500)
- Stamp duty (1%)
- Engineer's report (€400)
- Movers fees (€300)