Sell House - Tips And Resources

Question: How buying/ selling houses work??

(Posted by: Malik H on 2008-05-31 11:26:33)

I wanted someone to explain how buying / selling houses work? If i bought a house worth £125k, and borrowed a mortgage of £100k (putting down £25k deposit) - and decided to sell after 3 years and property is worth £150k then... how much would i earn? How much would i owe and how much would i have available if i wanted to buy another bigger house??? So in theory will i get back what i put down as deposit and what the house gained in value over time? What happens to the mortgage re- payments - would i get a return on that also??

Posted by: foxtraveller on 2008-05-31, 11:49:11

Figures don't matter, it is all relative. If prices doubled in three years (unlikely) then you would have to find a lot more money to buy another property, and may not be able to afford one at all. If house prices nose-dived then your investment becomes worth less and you are in negative equity. Very difficult times at the moment.

Posted by: Jude on 2008-05-31, 11:36:35

You would have the £25K you put down as deposit, plus the £25K that the property had gained in value, as tax-free profit. You would also have any money that you had paid off from the £100K mortgage, which probably would only be a few thousand, as most of your repayments would go on the interest. (That is if you got a standard repayment mortgage, I don't know how endowment or interest-only mortgages work.)

Posted by: Hibee on 2008-05-31, 11:39:23

It would depend on the period of your mortgage, amongst other things. There would probably be penalties for paying it off early. Also, you would have paid interest on the £100k for three years. You would also have several types of fee to pay. And, if the property was not your main residence, you would be liable for capital gains tax.