Using equity when moving home

katylou82

Hi there,


This is my first post so apologies if the questions I am asking are basic and obvious!


We are looking to move home and I can't get my head around how much we need to borrow. The numbers are as follows:


Expected house purchase price: £1.3m
Expected sale price for our current home: £975,000
Existing mortgage: £350,000
Other savings: £150,000


We need £400k to complete the renovations required on the new home, and I don't know where we get that from - do we hold it back from the equity in our existing house and get a larger mortgage? Or do we need to put as much equity into the mortgage as possible and then apply for additional borrowing after 6 months?


Sorry again as I am sure this is all basics!


Thank you all for your time.

SmashedAvacado

At completion your neet proceeds of sale will be £625k less agents fees, less legal fees

you have 150k of savings

which means to buy your new property you have 775k -- which means at completion of the purchase you need to find £525k plus the SDLT and legal fees.

So your new mortgage will be for about 550k at the time of purchase.

and then another 400k to fund the renovations - which you can borrow at completion by reducing what you put in the property - or remortgaging after a few months which probably isnt sensible.

Will the bank lend you 900K now?

katylou82

Thank you so much for your response.


We've not done the AIP yet as I'm not sure what figures to put in in terms of what deposit we have as I didn't know whether to include the £400k that we need to use for the improvements.


On a basic Mortgage Calculator our current provider will lend £890k with a £375k deposit (as I was holding the £400k back when doing the quick sums), so almost.


I wasn't aware that you could borrow at completion - thank you for that info, I will look into that further now.