Second time buying how does it work

[sally s]

Hey would really appreciate some advice on this. We bought our first house about 4 years ago and are hoping to move. I know all the ins and outs of being a first time buyer - but can't find any information on how it works when you are buying a second house. I think the equity on the house would be 150k after paying off mortgage. Now what? Do we get a whole new mortgage or how does it work? Don't fancy ringing my mortgage advisor have mental image of 'stupid' being written on my file! Would appreciate someone explaining how it works!

 

[Vanilla]

When you sell your first house you repay the mortgage outstanding. You then use the balance plus a new mortgage to buy a new house. If it is happening simultaneously then you will have to apply for a new loan now, which will come with a special condition that the old mortgage be redeemed out of the sale proceeds.

 

[Thrifty]

I'm presuming you are selling your current house and buying a new one - therefore the mortgage will have to change. When your property is sold your current mortgage is paid off and you'll have in the meantime applied for a new mortgage on the property you are going to buy. applying for the mortgage on the new property is basically the same as applying for it when you bought your first house. The equity you have in your current house will mean you'll probably need to borrow less to purchase the new house so you could possibly get a lower interest. The mortgage is basically a loan secured on the property so it has to be done on the property you are buying - usual valuations done by the mortgage provider etc.

Then you get a solicitor to deal with the sale and purchase of your current and future home - arrange for exchange and completion to go ahead on the same day (usually). Possibly use the deposit you get from the sale of your house to pay deposit on future house etc. Factor in all costs when considering how much mortgage you need. You'll probably have a stamp duty cost you may not have had before.

 

[sally s]

thanks guys appreciate that. When we got our mortgage it was fairly low as we weren't earning as much as we are now. Presumably now with having equity and a good record of repayments and better paid jobs we can up the amount we can borrow???

 

[snatch]

arrange for exchange and completion to go ahead on the same day (usually).

This is where I am having problems - I am putting deposit on a new build and it won't be completed for 9 months. So, do I put my own house on the market now and wait to complete sale in August...or put my house on the market next May (and would this be acceptable to banks/solicitor etc)

Thanks

 

[redstar]

Thrifty wrote;
Possibly use the deposit you get from the sale of your house to pay deposit on future house

I could be wrong but I don't think you can do this. Other threads have covered this topic, and basically the deposit is held by the solicitor until closing when it and the balance are paid over to the vendor.

I'm sure any solicitors out there can clarify this.