Decision in principle when remortgaging

Jamminella

Hi,
We're hoping to move to a bigger house and went to get a Mortgage in Principle this morning.
Just a bit confused though (should have asked at the time..) but the figure we got, say £350,000 : in theory is that the value of the house we can afford to buy? (i.e. does that figure include the £50k or so of equity we have already in our current house, made up or our initial deposit plus the amount we've paid off?)
It's confusing me because the wording says "....we could lend a residential mortgage of £350k" - but if we were to buy a house that cost £350k, surely they wouldn't actually be lending us 350k, rather 350k minus our equity. So does this mean potentially we could look at houses worth around 410k??

Apologies if it's a really stupid question!!!!
Any help much appreciated.

Thrugelmir

"....we could lend a residential mortgage of £350k"

So yes, your savings and equity could be added on top of the amount the lender is willing to advance.

Of course everything is then subject to, i.e. meeting the lenders criteria including affordability.

amnblog

The Lender has said £350,000 of lending on £400,000 purchase should be acceptable (including the equity you release when you sell).


This does not mean they will lending £350,000 on a £350,000 purchase as they will have a limited on the maximum ratio between loan and value.


Neither does it mean they will necessarily lend you £400,000 on £457,000 as you may already be on maximum affordability.

Jamminella

Thanks very much for your answers.
Maybe I should have put exact figures, hadn't realised it affected it, in terms of LTV.

The property we want is 400k.
Amount mortgage in principle is £385k.
We have 55k equity in our current house which is worth 220k.
I have worked out that the LTV would be about 85% (not sure if this is correct??)
So is it realistic to be looking for a 400k property?

Thrugelmir

On a £400k property. A LTV of 85% would require a mortgage of £340k.