Decision in principle not quite enough...

shazzer22

Morning all - this might be a really obvious question, but hoping you might be able to help. I'm not sure I can articulate it properly, but here's a stab at it!

So we might have done this a backwards way around, we've got a decision in principle ahead of having an offer accepted (I now appreciate that I could have answered some of my queries using a mortgage calculator)

The offer in principle is based on the full asking price for the property and a 10% deposit, funded by the sale of our house. We don't want to pay full asking price of course, but I did do that to figure out our options.

Our valuations on our property are coming back quite healthy and we look set to make a bit, certainly enough to cover the 10% on the next property and maybe a bit more.

So my question is, can we make up the shortfall between the amount the lender is prepared (albeit in principle, I get that bit) to lend us by another means (i.e... gift from parents?) I get that it isn't quite as easy as just adding it to your deposit lump. The shortfall is about £3.5k.

Trying_to_be_good

Do you have a shortfall if you include more of the equity in your current home? I've normally plowed all the equity into the next purchase, not the minimum to get the loan-to-value of the purchase price of the next home.

shazzer22

Trying_to_be_good wrote: »

Do you have a shortfall if you include more of the equity in your current home? I've normally plowed all the equity into the next purchase, not the minimum to get the loan-to-value of the purchase price of the next home.

That's what I think I'm a bit confused about actually, our equity is quite low, we've only been in this house for a year and had a 5% deposit initially and a HTB. Stupid question but the 'profit' of the house sale, can I add that the existing equity or am I really getting my knickers knotted on trying to understand this one? (Cor, I once thought of myself as quite intelligent.. now I seriously have my doubts!!)

Mummyto4kids

You will owe a percentage back to HTB - unless you've paid some off then it would be 20% of the sale price I think. Then whatever the difference is between your sale price and your mortgage is your profit. Take into account solicitors fees, stamp duty and other associated costs and this should tell you how much you have left to put down as a deposit.

amnblog

Yes, you can add the equity from the current property in to the new purchase.


Yes, you can top up with cash. Yours, or a gift from family, or both.


Also, just because one Lender wont stretch to all you need, this does not mean that another lender won't.

skimper

were going through a help to buy sale atm, before you can sell yours (after an offer has been made on it) you need to get your property valued by an independent surveyor (about £150) get that sent off and it takes up to 4 weeks to get back & tells you how much you owe.
it is either 20% of the sale price or 20% of the valuation price which ever is highest.
We sold ours for 112,500 & waiting on the decision of the valuer, if that comes back higher say £115,000 then we need to pay 20% of the valued price even though we didn't sell it at that. so be prepared to take that cost in to consideration.