Equity or deposit?

hawaii1105

Hi There

After some thoughts on this as the two mortgage brokers we are dealing with are contradicting each other!

We are about to put the house on the market and buy a bigger house now that we have kids. We are unsure what to do with our money, as we have about 40k equity in the house but then we have a further 50k in ISA's and savings accounts.

One broker has said to hold onto the 50k cash to use as a deposit as it will make us more attractive and give us more options with lenders

The other broker says just to plough that 50k into the existing mortgage.

So which is likely to be the better option? I should mention that i am a ltd company and a contractor, with only 1 years worth of accounts, which will tighten our options somewhat, but which of the above do you guys believe is better in the current market?

Thanks

amnblog

A bit difficult to say as we do not know your circumstances.


What is the intended purchase price?


Why did broker 2 say pay £50K off of current mortgage prior to moving?

hawaii1105

ok to give you more info, we should see 40k equity from the sale of our house, we are hoping to secure around 200k mortgage offer and have 50k in the bank (hoping to buy a 300k property)

i am a ltd company and a contractor but i have proof of rolling contract which has been extended, for another 12 months, i am just about to get my first year of accounts back from the accountant

Both brokers are confident that they can secure the above amount for lending, but as i say its just whether we keep the cash, or plough it into the existing mortgage to reduce it and increase the equity and decrease our monthly payment for however much longer it'll be until the new mortgage

martinsurrey

what rate is your mortgage?

what rate are your savings after tax?

amnblog

Whether your deposit is equity or cash is pretty much irrelevant in terms of your new mortgage.

Jhoney_2

hawaii1105 wrote: »

ok to give you more info, we should see 40k equity from the sale of our house, we are hoping to secure around 200k mortgage offer and have 50k in the bank (hoping to buy a 300k property)

i am a ltd company and a contractor but i have proof of rolling contract which has been extended, for another 12 months, i am just about to get my first year of accounts back from the accountant

Both brokers are confident that they can secure the above amount for lending, but as i say its just whether we keep the cash, or plough it into the existing mortgage to reduce it and increase the equity and decrease our monthly payment for however much longer it'll be until the new mortgage

Ditto Broker 1 imo.

Also, what would you do if that £50k of possible equity wasn't realised? Could you still move etc? At least your deposit would be safe and give you a good launching pad with Lenders.

If you can afford the payments in the meantime and ensure it is available for your solicitor at the appropriate time I would leave it where it is.

This is me being unnecessarily cautious I know, but if you can't afford to lose it, why bother putting all your eggs in one basket?