Can we keep most of our equity and have a bigger mortage?

Runtings

Ok folks, new poster here (been lurking for a while now so joined up) so be gentle :beer:

Right then, accepted an offer on our house and all seems well so far.
We have approx 32k equity in it so my first question goes a little something like this....

We will put in an offer on an house we been looking at for a while.
The house has a market value of 145k - after a good sit down with my advisor we can borrow up to 125k from the bank (joint application but mrs is part time) total income is 40k. So if the offer of 125k is accepted then we'll be buzzing considering the potential after the usual home improvements/upgrades etc so lets base this on the offer being accepted at 125k.

....Now 'That' question I mentioned earlier (:D) is:

Will I still be allowed to borrow that 125k mortgage?

We will use 12.5k out of our equity as a deposit and keep the rest for the usual 'home improvements and borrow the 125k < is that allowed?

Basically I want to make sure ive got a good chunk to throw at the house and make it to how we want it, around 15k this will set us back for how we would like it and keep whatever is left in savings.

Does what ive said make sense?

Thrugelmir

Depends if a 90% mortgage is available.

Will the vendor knock £20k off......

Runtings

Hmmm yes thats what im not sure about.

Ok another scenario...

House is 125k,
Will the lender still give me the full 125 with 30k of my equity as a deposit?

So in theory ill use 95k from the lender and use the rest for the improvements..

:think: or is that the same question.
So confusing. Guess ill need to harass my advisor once again.

Morgage_Confused

im confused(as usual:rotfl:)....isnt that having your cake and eating it aswell?

Annisele

Runtings wrote: »

Ok another scenario...

House is 125k,
Will the lender still give me the full 125 with 30k of my equity as a deposit?

So in theory ill use 95k from the lender and use the rest for the improvements..

No, that won't work.

Broadly, the lender cares about two things: how much is it prepared to lend to you; and how much is it prepared to lend on a particular house. The amount you'll get is always the lower of those two figures.

In your case, it sounds as though the lender is prepared to lend to you - up to a maximum of £125k.

When it comes to the house, some houses are just plain unmortgageable (falling down, defective title, no kitchen or bathroom etc). Assuming the house is generally fine, the most lenders have a selection of products available for different LTVs (loan to value).

So, on a house with a purchase price of £125k, a lender might have a 90% LTV product and lend a maximum of £112.5k (90% of £125k). Or it might have a 60% LTV product and lend a maximum of £75k (60% of £125k).

Even if you were earning a zillion pounds and had perfect credit, no lender would lend you £125k for a £125k house on a 90% LTV basis.

100% LTV mortgages used to be available pre crunch (125% mortgages were available too...) but you won't get one of those now.