General Mortgage advice... (yep, more)

Tee Hee Johnson

Tee Hee Johnson

Tee Hee Johnson

Soldato
Joined
30 May 2007
Posts
5,035
Location
Glasgow, Scotland
Hello!

I'm only just starting looking at things, study, research, etc. Won't be in the position to make a move for a good while yet... but I'm finding one question hard to answer!

Basically I'll be starting as small as I can :)

What happens next, how do you go about moving on to your next property?

If starting off on a wee one bed say 60k, then moving to a 2 bed 100k... for example. So the first flat sells, what happens to the Mortgage? It can't be closed for the selling price of the place as a 60k Mortgage is worth about 110k after 25 years of payments.

So I assume... actually, I don't know!

Help me out here, what is the basic process from moving onto a new (2nd) property.

All speculation, I just cant seem to find an answer to this question :/

Thanks

Craig
 
Depends on the mortgage. Most will tie you in for x amount of years in which time you pay a penalty for paying off the loan.

Once this period i finished you are free to pay off the mortgage (generally with a new mortgage of your choosing).

If you wish to move whilst in the tie in period you will have to port to mortgage to the new property and probably stay with the current lender - you may have to take out a bigger mortgage which in my case they have treated as a seperate loan in the paperwork but the payments are added together.

Best to query this with whoever you take your first mortgage out with.
 
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Most lenders will let you port it over if you buy a new property, regardless of any tie in period. You keep the same product, but just borrow more within the same terms. :)
 
craig_kennedy83 said:
If starting off on a wee one bed say 60k, then moving to a 2 bed 100k... for example. So the first flat sells, what happens to the Mortgage? It can't be closed for the selling price of the place as a 60k Mortgage is worth about 110k after 25 years of payments.
Click to expand...

You buy place 1 = 60K

You then go on to sell place 1 which has hopefully gained in value, say 75K.You sell place 1 for 75K and settle your mortgage which would be less than 75K and you have the rest to put into a new place as a deposit


I think you might be thinking about what happens if you get a loan for something that depreciates e.g. car loan. In general, houses gain in value therefore, in general, you owe less than what it is worth i.e. positive equity.

Of course, this is not always the case due to the market but, overall, it is.

If you sell a house at a loss then you need to cover the outstanding debt with the mortgage company.
 
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