Trading Down??

S

Shelila

Guest
Hi,

We currently have a mortgage of 243K and the house is worth about 260K at the moment (from what we have seen houses selling for in the area).

We have seen a house for 189K that we really wanna go for but I really don't think that we would get the 260 for ours, we would probably only get about 250. We don't have any savings to use for the 10% deposit. The house is definitely worth more than 189K, its just that the previous owner died and the family are trying to get a quick sale.

Would a bank give us a loan for the deposit??? Also we are currently with start mortgages but can't move away from them because we don't have enough equity to go to another bank so we would be paying way less with this new house.
 
Even getting 250k could be hard - only a 10k difference between asking price and selling price? As I don't know the location - house type - area and condition of the house etc for it to make only 10k less could be optimistic (remember that is a general comment and without detail one can't be sure). Even when you look at the other houses in that area, the big question is how long are they on the market, what kind of price drops have they seen etc. How much would you have to drop to make a quick sale. I recently saw a house advertised for 260k, auctioneer said he had an offer of 220k and other houses in the area are advertised in the 310k bracket. The auctioneer said he expected it to go for 235k. It is still on the market at 260 with the last 3 months.
Start Mortgages, try to move away if any way possible, have you gone to any of the main stream mortgage banks. Look at your options. For a deposit look at the credit union for a loan - relatives, family etc. Also financial institutions are not nit wits and are really probing everything now so you will have to account for the deposit unless you can mask it in some way i.e. a relative giving it to you. Also you may have a proven track record of paying a mortgage and a stable income which might be in your favour.
Can you talk to the family that are selling for 189. Given you think that you can sell for 250, you are not far away from a deposit. Would you consider renting or buying another property in the area if you had to sell yours and then this one fell through. Look at the bigger picture.
I hope this helps you.
Mike
 

I think you are wearing both a sellers and a buyers hat here.
If the house was `worth` more than the asked price it would be sold.
I would not assume your house is worth anything until you have the cash in your hand after it has been sold.
 
Shelila said:
Hi,

We currently have a mortgage of 243K and the house is worth about 260K at the moment (from what we have seen houses selling for in the area).
Click to expand...

How do you know what houses in the area are selling for?

If you're judging it only by asking prices, they probably don't reflect the final bargain price. There is much anecdotal chatter about bargain prices being 10-20% below asking prices. That could mean that the 260k asking prices might actually be going for 220k-240k. You will also have to subtract legal fees and agency fees from that before you calculate your net amount.

The good news is the same principle probably applies to the 189k house - that might go for a lot less at the end of the day. However, be careful when bidding on executor sales and lower your expectations: regularly, siblings can't agree on the final sale price and the deals can fall through.

In relation to a loan for a deposit, I think you would be better off in the long run to save the money and only buy the house once you can afford the upfront outlay such as deposit, expenses and legal fees.
 
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