Q We’re fed up with excessive mortgage prices and wish to repay our money owed and the earlier the higher. We're comfortable to downsize and simplify our life to make this attainable.
We now have two properties, one flat with no mortgage which is valued at £43,500. We aren't capable of reside on this property as a consequence of its location, in a special city, too removed from our jobs. It additionally wants some renovating.
The opposite property, which is the place we reside, has a mortgage and is valued at £174,000. We nonetheless have about £73,000 to repay.
What's the greatest plan of action? Promote each properties and attempt to discover a cheaper property with the proceeds? Or promote the least precious property and put the cash in the direction of decreasing the mortgage? RB
A If you happen to offered each properties, you'd be mortgage free and have simply over £142,000 (after paying off your present mortgage and assuming you paid property brokers’ charges of 1% plus VAT). You may additionally have to pay stamp responsibility, and can face conveyancing prices, and the opposite charges related to shopping for.
So my query to you is: would this be sufficient to purchase a property in an space that you'd be comfortable dwelling in? And do you could have the cash to pay these prices on high? If the solutions are not any, you would wish to high up the £142,000 with one other mortgage to have the ability to purchase an appropriate house, and I’d be tempted to go together with your second choice.
Promoting the flat in its present state would give slightly below £43,000 (after property brokers’ charges) so you can carry the mortgage on the home you reside in down to simply below £29,900. What I wouldn’t do is spend cash renovating the flat earlier than promoting it until an property agent tells you that the work is important to make the flat sellable.
If you happen to do resolve to promote the flat and scale back your mortgage with the proceeds, it could additionally make sense to see in the event you can scale back your mortgage prices much more by re-mortgaging to a special lender. It’s additionally price asking your present lender is they will give you a greater deal – particularly as your mortgage would signify lower than 20% of the worth of your private home.
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