Sell House to Buy House - But two years left of cheap fixed rate.

[alanalanalan]

Hello! A house has come up for sale close to where we currently live, and it looks very attractive - lots of work/extensions done that we had planned to do in future. With current materials costs and difficulty in securing contractors, we are considering selling and moving (rather than renovating current house).

We are currently 2 years into a 4 year fixed green mortgage with Haven at 2% interest rate. The lowest fixed I can find on the market now is 3.55% with Haven on a 4 year fixed green mortgage (new house is BER B3). €270k outstanding on mortgage - current house value approx €470k, new house advertised for €550k.

I spoke with Haven and they have told me that they do not facilitate house moves - we would need to pay off the existing mortgage in full, with whatever penalty break fee is due (although it may be 0), and re-apply via broker for a new mortgage.

Is it a mad time to make a change like this - exit a 2% mortgage to get into a new mortgage at 3.55% (or more)? In reality, with €200k surplus after the sale of the current house, we would need a mortgage of €350k to €370k, taking out €100k of new debt with the higher interest rate.

Appreciate your thoughts!

 

[Brendan Burgess]

€270k outstanding on mortgage

Current rate: 2%
New rate 3.55%
Difference : 1.55%

€270k @1.55% = €4k for two years = €8k ( A bit less as it will take about 3 months before you sell your own house)
+ penalty - but it will probably be zero or small.

new house advertised for €550k.

So the cost is about 1.5% of the house price.

So it is just not a material factor in the decision.

You may well pay 10% to 20% above or below the advertised price.



Brendan

 

[Tadaima]

Also consider your estate agent fees for selling, around €9000 (@1.5% + Vat + advertising fees), legal fees for buying and selling, and stamp duty on purchase. Plus the hassle of moving.

 

[alanalanalan]

Also consider your estate agent fees for selling, around €9000 (@1.5% + Vat + advertising fees), legal fees for buying and selling, and stamp duty on purchase. Plus the hassle of moving.

Thanks Tadaima! Have never sold a house before, so wasn't entirely sure how that part worked. If the house is listed with the estate agent, but does not sell -typically do they still apply a fee? Or is the fee only applied as a % of the sale if the sale goes ahead?

Thanks also Brendan!

 

[ClubMan]

If the house is listed with the estate agent, but does not sell -typically do they still apply a fee? Or is the fee only applied as a % of the sale if the sale goes ahead?

If it doesn't sell then they usually just charge the costs for photos, listing etc. Usually a few hundred euros. The agent's fee of c. 1% or more plus VAT would only be charged if/when it actually sells. But double check the engagement terms and conditions with your agent to be clear and properly informed.