Part exchange & mortgage

Marie19x

Hiya,


I need a little advice from others who have part exchanged before!

We're looking into part exchanging our home for a new build, worth £252,500. With our current home we've been told we will get around £125,000 from the builder for it.
We still have a mortgage of about £92,0000 on our current home.


Re the mortgage, how much of a mortgage will we need? I assumed it would be our home price minus the new build price. But I had to phone Meridian mortgages yesterday to "qualify" and he said they only use my deposit. If that's the case, that just means we're buying the house as if we were to buy a non- new build! Like any normal house. That doesn't sound like a part exchange deal to me.
If we didn't currently have a mortgage on the property, then we wouldn't need to part exchange because we'd have enough money to buy the home with just our equity and maybe a smal mortgage.

I understood that they take our home price off the price of the new build, so would total £127,000....then our equity becomes part of our deposit as usual and they go on to sell our property?

Neve rsold a home before, and no one seems to explain anything without charging the earth, so thought the best place would be to ask someone who ha sbeen through the process.

sal_III

From Lender's perspective part-exchange is the same as selling your old property and buying a new one.

You take a new mortgage on the new property using the equity from the old property as deposit and borrowing the difference.

Part-exchange simply saves you the trouble of finding a buyer for your old property that matches the completion date of your new build.

So in your case you will have £33'000 (plus any savings you might want to add to that) as a deposit on the new build and will have to borrow the £219'000