Can I cash in equity when I move?

barney28

I have finally managed to get on the property ladder and just bought my first home for £150k (with a £142.5k mortgage). It is an absolute wreck and I plan to spend the next year refurbishing it, thankfully my whole family are tradesmen which will help with the refurb costs!
Being a first time buyer, I have no idea what happens to the equity in the property should I wish to move. I work in London, so am hoping to make enough money to facilitate buying a flat in the city. If for example I sell my current property for £200k after the refurb, and move to a £300k property in London, does all that £57.5k equity have to go towards the new flat? Or is it possible to go for a 10% deposit mortgage and cash in the rest of the £27.5k?

Any guidance would be much appreciated as it seems pretty hard to find this info online!!

glosoli

You can retain some of the equity if you wish. People do this often to pay off debts, pay house buying/selling fees or just to have cash in the bank, it is up to you.

minimike2

It depends on your mortgage lender, as a small number insist on all the equity going into the new purchase. Not an issue if you are not tied into a deal at the time of moving as you can just move to a new mortgage lender / avoid those lenders for the new mortgage, but should have been a consideration at the time of the mortgage application if you plan on moving during the time an ERC is chargeable.

PasturesNew

It's your choice, based on you being mortgageable for what you want to buy next time, how much of your equity you choose to stick in your pocket, or put into the next house is entirely up to you.

Of course, putting it all into the next one makes more mortgages available to you, but if you can get a new mortgage you're happy with then you can spend all your current equity of drugs, wine, women, song - and even waste a bit if you wish.