Using house equity, nearly mortgage free

Debsydoos

We've seen the house of our dreams for sale for circa 220k. We have overdrafts/credit card debts which we are managing. Our current home (outstanding mortgage 2k) is worth circa 550k. Our current home needs attention which we are carrying out but won't be able to sell before our dream home is sold. Questions are; can we use the equity in our current home to buy our dream home without the deposit? Could we holiday let dream home until current home is sold or let current home to pay for dream home until sold. HELP please:)

wine_night

Could you provide more information re your situation?

What is the value of your overdrafts/credit cards?

What "attention" does your current home need?

Are you in a position where you could service a mortgage? If so could not remortgage your current residence worth £550k to pay off your debts and purchase the dream home outright?

G_M

* If you are 'managing' your debts, you can ignore them (for these purposes). Just continue to manage them as you currently are.

* Your house is worth £550K - in it's current condition, or once 'done up?

* let's assume you mean once done up. So it's worth, say, £520 in current condition.

* your outstanding mortgage is £2K.

* so your equity is £518K

Solution - put it up for sale, tomorrow, priced at £515K for a quick sale. You'll then have plenty of cash spare to buy your dream property for £220K

Tiners

What G_M said... Surely if you current home really is worth £550k you could market it at £510k-£520k, get a very quick sale, purchase your dream home for £220k and have almost £300k left over!

gingercordial

Agreed the pricing for a quick sale route is best. If not, and instead you take a mortgage on the current property, you'll pay the second home SDLT on the new place. You can reclaim that if you sell the old one within three years but that's likely to trigger a large early repayment charge from the mortgage lender (unless you can find a deal without one). Either way it'll cost you.